Correlation Between SOGECLAIR and Discover Financial
Can any of the company-specific risk be diversified away by investing in both SOGECLAIR 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 SOGECLAIR and Discover Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SOGECLAIR SA INH and Discover Financial Services, you can compare the effects of market volatilities on SOGECLAIR 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 SOGECLAIR with a short position of Discover Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of SOGECLAIR and Discover Financial.
Diversification Opportunities for SOGECLAIR and Discover Financial
0.5 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between SOGECLAIR and Discover is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding SOGECLAIR SA INH and Discover Financial Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Discover Financial and SOGECLAIR 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 SOGECLAIR SA INH 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 SOGECLAIR i.e., SOGECLAIR and Discover Financial go up and down completely randomly.
Pair Corralation between SOGECLAIR and Discover Financial
Assuming the 90 days horizon SOGECLAIR is expected to generate 7.88 times less return on investment than Discover Financial. But when comparing it to its historical volatility, SOGECLAIR SA INH is 1.08 times less risky than Discover Financial. It trades about 0.01 of its potential returns per unit of risk. Discover Financial Services is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 10,337 in Discover Financial Services on November 6, 2024 and sell it today you would earn a total of 9,099 from holding Discover Financial Services or generate 88.02% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
SOGECLAIR SA INH vs. Discover Financial Services
Performance |
| Timeline |
| SOGECLAIR SA INH |
| Discover Financial |
SOGECLAIR and Discover Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SOGECLAIR and Discover Financial
The main advantage of trading using opposite SOGECLAIR and Discover Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SOGECLAIR 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.| SOGECLAIR vs. Zijin Mining Group | SOGECLAIR vs. Kingdee International Software | SOGECLAIR vs. Harmony Gold Mining | SOGECLAIR vs. Eurasia Mining Plc |
| Discover Financial vs. Take Two Interactive Software | Discover Financial vs. ATOSS SOFTWARE | Discover Financial vs. Advanced Medical Solutions | Discover Financial vs. OPERA SOFTWARE |
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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.
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