Correlation Between Discover Financial and Inspiration Healthcare
Can any of the company-specific risk be diversified away by investing in both Discover Financial and Inspiration Healthcare 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 Inspiration Healthcare 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 Inspiration Healthcare Group, you can compare the effects of market volatilities on Discover Financial and Inspiration Healthcare 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 Inspiration Healthcare. Check out your portfolio center. Please also check ongoing floating volatility patterns of Discover Financial and Inspiration Healthcare.
Diversification Opportunities for Discover Financial and Inspiration Healthcare
-0.72 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Discover and Inspiration is -0.72. Overlapping area represents the amount of risk that can be diversified away by holding Discover Financial Services and Inspiration Healthcare Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Inspiration Healthcare 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 Inspiration Healthcare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Inspiration Healthcare has no effect on the direction of Discover Financial i.e., Discover Financial and Inspiration Healthcare go up and down completely randomly.
Pair Corralation between Discover Financial and Inspiration Healthcare
Assuming the 90 days trading horizon Discover Financial Services is expected to generate 2.49 times more return on investment than Inspiration Healthcare. However, Discover Financial is 2.49 times more volatile than Inspiration Healthcare Group. It trades about 0.19 of its potential returns per unit of risk. Inspiration Healthcare Group is currently generating about -0.33 per unit of risk. If you would invest 15,520 in Discover Financial Services on August 31, 2024 and sell it today you would earn a total of 2,662 from holding Discover Financial Services or generate 17.15% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Discover Financial Services vs. Inspiration Healthcare Group
Performance |
| Timeline |
| Discover Financial |
| Inspiration Healthcare |
Discover Financial and Inspiration Healthcare Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Discover Financial and Inspiration Healthcare
The main advantage of trading using opposite Discover Financial and Inspiration Healthcare positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Discover Financial position performs unexpectedly, Inspiration Healthcare 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 Inspiration Healthcare will offset losses from the drop in Inspiration Healthcare's long position.| Discover Financial vs. Neometals | Discover Financial vs. Coor Service Management | Discover Financial vs. Aeorema Communications Plc | Discover Financial vs. JLEN Environmental Assets |
| Inspiration Healthcare vs. Toyota Motor Corp | Inspiration Healthcare vs. SoftBank Group Corp | Inspiration Healthcare vs. State Bank of | Inspiration Healthcare vs. MOL Hungarian Oil |
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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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