Correlation Between Discover Financial and Games Workshop
Can any of the company-specific risk be diversified away by investing in both Discover Financial and Games Workshop at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Discover Financial and Games Workshop into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Discover Financial Services and Games Workshop Group, you can compare the effects of market volatilities on Discover Financial and Games Workshop and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Discover Financial with a short position of Games Workshop. Check out your portfolio center. Please also check ongoing floating volatility patterns of Discover Financial and Games Workshop.
Diversification Opportunities for Discover Financial and Games Workshop
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Discover and Games is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Discover Financial Services and Games Workshop Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Games Workshop Group and Discover Financial is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Discover Financial Services are associated (or correlated) with Games Workshop. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Games Workshop Group has no effect on the direction of Discover Financial i.e., Discover Financial and Games Workshop go up and down completely randomly.
Pair Corralation between Discover Financial and Games Workshop
Assuming the 90 days trading horizon Discover Financial Services is expected to generate 1.11 times more return on investment than Games Workshop. However, Discover Financial is 1.11 times more volatile than Games Workshop Group. It trades about 0.21 of its potential returns per unit of risk. Games Workshop Group is currently generating about 0.21 per unit of risk. If you would invest 13,906 in Discover Financial Services on August 30, 2024 and sell it today you would earn a total of 4,276 from holding Discover Financial Services or generate 30.75% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Discover Financial Services vs. Games Workshop Group
Performance |
| Timeline |
| Discover Financial |
| Games Workshop Group |
Discover Financial and Games Workshop Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Discover Financial and Games Workshop
The main advantage of trading using opposite Discover Financial and Games Workshop positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Discover Financial position performs unexpectedly, Games Workshop can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Games Workshop will offset losses from the drop in Games Workshop's long position.| Discover Financial vs. Cairo Communication SpA | Discover Financial vs. Dalata Hotel Group | Discover Financial vs. Scandinavian Tobacco Group | Discover Financial vs. Park Hotels Resorts |
| Games Workshop vs. Fevertree Drinks Plc | Games Workshop vs. Young Cos Brewery | Games Workshop vs. Pets at Home | Games Workshop vs. Infrastrutture Wireless Italiane |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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