Correlation Between General Dynamics and Discover Financial
Can any of the company-specific risk be diversified away by investing in both General Dynamics and Discover 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 General Dynamics and Discover Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Dynamics Corp and Discover Financial Services, you can compare the effects of market volatilities on General Dynamics and Discover 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 General Dynamics with a short position of Discover Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of General Dynamics and Discover Financial.
Diversification Opportunities for General Dynamics and Discover Financial
-0.58 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between General and Discover is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding General Dynamics Corp and Discover Financial Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Discover Financial and General Dynamics 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 General Dynamics Corp are associated (or correlated) with Discover Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Discover Financial has no effect on the direction of General Dynamics i.e., General Dynamics and Discover Financial go up and down completely randomly.
Pair Corralation between General Dynamics and Discover Financial
Assuming the 90 days trading horizon General Dynamics Corp is expected to under-perform the Discover Financial. In addition to that, General Dynamics is 1.32 times more volatile than Discover Financial Services. It trades about -0.42 of its total potential returns per unit of risk. Discover Financial Services is currently generating about -0.05 per unit of volatility. If you would invest 17,924 in Discover Financial Services on September 13, 2024 and sell it today you would lose (283.00) from holding Discover Financial Services or give up 1.58% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
General Dynamics Corp vs. Discover Financial Services
Performance |
| Timeline |
| General Dynamics Corp |
| Discover Financial |
General Dynamics and Discover Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with General Dynamics and Discover Financial
The main advantage of trading using opposite General Dynamics and Discover Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if General Dynamics position performs unexpectedly, Discover 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 Discover Financial will offset losses from the drop in Discover Financial's long position.| General Dynamics vs. Capital Drilling | General Dynamics vs. Tyson Foods Cl | General Dynamics vs. Gaztransport et Technigaz | General Dynamics vs. Austevoll Seafood ASA |
| Discover Financial vs. Federal Realty Investment | Discover Financial vs. Jacquet Metal Service | Discover Financial vs. Silvercorp Metals | Discover Financial vs. Kinnevik Investment AB |
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 CEOs Directory module to screen CEOs from public companies around the world.
Other Complementary Tools
| Price Ceiling Movement Calculate and plot Price Ceiling Movement for different equity instruments | |
| Price Transformation Use Price Transformation models to analyze the depth of different equity instruments across global markets | |
| Theme Ratings Determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Technical Analysis Check basic technical indicators and analysis based on most latest market data | |
| Economic Indicators Top statistical indicators that provide insights into how an economy is performing |