Correlation Between Global Net and Discover Financial
Can any of the company-specific risk be diversified away by investing in both Global Net 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 Global Net and Discover Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Global Net Lease and Discover Financial Services, you can compare the effects of market volatilities on Global Net 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 Global Net with a short position of Discover Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Global Net and Discover Financial.
Diversification Opportunities for Global Net and Discover Financial
-0.74 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Global and Discover is -0.74. Overlapping area represents the amount of risk that can be diversified away by holding Global Net Lease and Discover Financial Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Discover Financial and Global Net 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 Global Net Lease 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 Global Net i.e., Global Net and Discover Financial go up and down completely randomly.
Pair Corralation between Global Net and Discover Financial
Assuming the 90 days trading horizon Global Net is expected to generate 2.68 times less return on investment than Discover Financial. In addition to that, Global Net is 1.1 times more volatile than Discover Financial Services. It trades about 0.1 of its total potential returns per unit of risk. Discover Financial Services is currently generating about 0.3 per unit of volatility. If you would invest 17,637 in Discover Financial Services on October 25, 2024 and sell it today you would earn a total of 1,956 from holding Discover Financial Services or generate 11.09% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 85.0% |
| Values | Daily Returns |
Global Net Lease vs. Discover Financial Services
Performance |
| Timeline |
| Global Net Lease |
| Discover Financial |
Global Net and Discover Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Global Net and Discover Financial
The main advantage of trading using opposite Global Net and Discover Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Global Net 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.| Global Net vs. Medical Properties Trust | Global Net vs. Catena Media PLC | Global Net vs. XLMedia PLC | Global Net vs. Hollywood Bowl Group |
| Discover Financial vs. Toyota Motor Corp | Discover Financial vs. SoftBank Group Corp | Discover Financial vs. OTP Bank Nyrt | Discover Financial vs. ONEOK Inc |
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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