Correlation Between Discover Financial and Mineral Financial
Can any of the company-specific risk be diversified away by investing in both Discover Financial and Mineral Financial 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 Mineral Financial 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 Mineral Financial Investments, you can compare the effects of market volatilities on Discover Financial and Mineral Financial 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 Mineral Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Discover Financial and Mineral Financial.
Diversification Opportunities for Discover Financial and Mineral Financial
0.5 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Discover and Mineral is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Discover Financial Services and Mineral Financial Investments in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mineral Financial 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 Mineral Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mineral Financial has no effect on the direction of Discover Financial i.e., Discover Financial and Mineral Financial go up and down completely randomly.
Pair Corralation between Discover Financial and Mineral Financial
Assuming the 90 days trading horizon Discover Financial is expected to generate 1.34 times less return on investment than Mineral Financial. But when comparing it to its historical volatility, Discover Financial Services is 1.16 times less risky than Mineral Financial. It trades about 0.26 of its potential returns per unit of risk. Mineral Financial Investments is currently generating about 0.31 of returns per unit of risk over similar time horizon. If you would invest 1,275 in Mineral Financial Investments on November 7, 2024 and sell it today you would earn a total of 200.00 from holding Mineral Financial Investments or generate 15.69% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.24% |
| Values | Daily Returns |
Discover Financial Services vs. Mineral Financial Investments
Performance |
| Timeline |
| Discover Financial |
| Mineral Financial |
Discover Financial and Mineral Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Discover Financial and Mineral Financial
The main advantage of trading using opposite Discover Financial and Mineral Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Discover Financial position performs unexpectedly, Mineral Financial 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 Mineral Financial will offset losses from the drop in Mineral Financial's long position.| Discover Financial vs. Vitec Software Group | Discover Financial vs. Spirent Communications plc | Discover Financial vs. SMA Solar Technology | Discover Financial vs. Ashtead Technology Holdings |
| Mineral Financial vs. Arrow Electronics | Mineral Financial vs. Waste Management | Mineral Financial vs. Gaming Realms plc | Mineral Financial vs. Auto Trader Group |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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