Correlation Between Discover Financial and JLEN Environmental
Can any of the company-specific risk be diversified away by investing in both Discover Financial and JLEN Environmental 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 JLEN Environmental 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 JLEN Environmental Assets, you can compare the effects of market volatilities on Discover Financial and JLEN Environmental 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 JLEN Environmental. Check out your portfolio center. Please also check ongoing floating volatility patterns of Discover Financial and JLEN Environmental.
Diversification Opportunities for Discover Financial and JLEN Environmental
-0.93 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Discover and JLEN is -0.93. Overlapping area represents the amount of risk that can be diversified away by holding Discover Financial Services and JLEN Environmental Assets in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JLEN Environmental Assets 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 JLEN Environmental. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JLEN Environmental Assets has no effect on the direction of Discover Financial i.e., Discover Financial and JLEN Environmental go up and down completely randomly.
Pair Corralation between Discover Financial and JLEN Environmental
Assuming the 90 days trading horizon Discover Financial Services is expected to generate 2.21 times more return on investment than JLEN Environmental. However, Discover Financial is 2.21 times more volatile than JLEN Environmental Assets. It trades about 0.21 of its potential returns per unit of risk. JLEN Environmental Assets is currently generating about -0.24 per unit of risk. If you would invest 14,810 in Discover Financial Services on September 5, 2024 and sell it today you would earn a total of 2,795 from holding Discover Financial Services or generate 18.87% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Discover Financial Services vs. JLEN Environmental Assets
Performance |
| Timeline |
| Discover Financial |
| JLEN Environmental Assets |
Discover Financial and JLEN Environmental Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Discover Financial and JLEN Environmental
The main advantage of trading using opposite Discover Financial and JLEN Environmental positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Discover Financial position performs unexpectedly, JLEN Environmental 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 JLEN Environmental will offset losses from the drop in JLEN Environmental's long position.| Discover Financial vs. GreenX Metals | Discover Financial vs. Panther Metals PLC | Discover Financial vs. Ecclesiastical Insurance Office | Discover Financial vs. Cornish Metals |
| JLEN Environmental vs. Discover Financial Services | JLEN Environmental vs. Central Asia Metals | JLEN Environmental vs. Summit Materials Cl | JLEN Environmental vs. St Galler Kantonalbank |
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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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