Correlation Between Discover Financial and Sabre Insurance
Can any of the company-specific risk be diversified away by investing in both Discover Financial and Sabre Insurance 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 Sabre Insurance 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 Sabre Insurance Group, you can compare the effects of market volatilities on Discover Financial and Sabre Insurance 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 Sabre Insurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Discover Financial and Sabre Insurance.
Diversification Opportunities for Discover Financial and Sabre Insurance
-0.76 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Discover and Sabre is -0.76. Overlapping area represents the amount of risk that can be diversified away by holding Discover Financial Services and Sabre Insurance Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sabre Insurance 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 Sabre Insurance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sabre Insurance Group has no effect on the direction of Discover Financial i.e., Discover Financial and Sabre Insurance go up and down completely randomly.
Pair Corralation between Discover Financial and Sabre Insurance
Assuming the 90 days trading horizon Discover Financial Services is expected to generate 1.35 times more return on investment than Sabre Insurance. However, Discover Financial is 1.35 times more volatile than Sabre Insurance Group. It trades about 0.11 of its potential returns per unit of risk. Sabre Insurance Group is currently generating about 0.01 per unit of risk. If you would invest 10,660 in Discover Financial Services on September 14, 2024 and sell it today you would earn a total of 7,120 from holding Discover Financial Services or generate 66.79% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 97.6% |
| Values | Daily Returns |
Discover Financial Services vs. Sabre Insurance Group
Performance |
| Timeline |
| Discover Financial |
| Sabre Insurance Group |
Discover Financial and Sabre Insurance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Discover Financial and Sabre Insurance
The main advantage of trading using opposite Discover Financial and Sabre Insurance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Discover Financial position performs unexpectedly, Sabre Insurance 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 Sabre Insurance will offset losses from the drop in Sabre Insurance's long position.| Discover Financial vs. Dolly Varden Silver | Discover Financial vs. Ironveld Plc | Discover Financial vs. Baker Steel Resources | Discover Financial vs. Endeavour Mining Corp |
| Sabre Insurance vs. SupplyMe Capital PLC | Sabre Insurance vs. Lloyds Banking Group | Sabre Insurance vs. Premier African Minerals | Sabre Insurance vs. SANTANDER UK 8 |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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