Correlation Between Raymond James and Discover Financial
Can any of the company-specific risk be diversified away by investing in both Raymond James 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 Raymond James and Discover Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Raymond James Financial and Discover Financial Services, you can compare the effects of market volatilities on Raymond James 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 Raymond James with a short position of Discover Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Raymond James and Discover Financial.
Diversification Opportunities for Raymond James and Discover Financial
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Raymond and Discover is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Raymond James Financial and Discover Financial Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Discover Financial and Raymond James 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 Raymond James Financial 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 Raymond James i.e., Raymond James and Discover Financial go up and down completely randomly.
Pair Corralation between Raymond James and Discover Financial
Assuming the 90 days trading horizon Raymond James is expected to generate 1.21 times less return on investment than Discover Financial. But when comparing it to its historical volatility, Raymond James Financial is 1.3 times less risky than Discover Financial. It trades about 0.32 of its potential returns per unit of risk. Discover Financial Services is currently generating about 0.3 of returns per unit of risk over similar time horizon. 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 Together |
| Strength | Strong |
| Accuracy | 94.12% |
| Values | Daily Returns |
Raymond James Financial vs. Discover Financial Services
Performance |
| Timeline |
| Raymond James Financial |
| Discover Financial |
Raymond James and Discover Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Raymond James and Discover Financial
The main advantage of trading using opposite Raymond James and Discover Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Raymond James 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.| Raymond James vs. Smithson Investment Trust | Raymond James vs. EJF Investments | Raymond James vs. Samsung Electronics Co | Raymond James vs. CleanTech Lithium plc |
| 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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