Correlation Between American Express and Discover Financial
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By analyzing existing cross correlation between American Express and Discover Financial Services, you can compare the effects of market volatilities on American Express 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 American Express with a short position of Discover Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Express and Discover Financial.
Diversification Opportunities for American Express and Discover Financial
0.94 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between American and Discover is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding American Express and Discover Financial Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Discover Financial and American Express 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 American Express 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 American Express i.e., American Express and Discover Financial go up and down completely randomly.
Pair Corralation between American Express and Discover Financial
Assuming the 90 days trading horizon American Express is expected to generate 1.4 times less return on investment than Discover Financial. But when comparing it to its historical volatility, American Express is 1.52 times less risky than Discover Financial. It trades about 0.14 of its potential returns per unit of risk. Discover Financial Services is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 11,373 in Discover Financial Services on September 3, 2024 and sell it today you would earn a total of 5,817 from holding Discover Financial Services or generate 51.15% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
American Express vs. Discover Financial Services
Performance |
| Timeline |
| American Express |
| Discover Financial |
American Express and Discover Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Express and Discover Financial
The main advantage of trading using opposite American Express and Discover Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Express 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.| American Express vs. CVR Medical Corp | American Express vs. UNIVMUSIC GRPADR050 | American Express vs. MeVis Medical Solutions | American Express vs. Apollo Medical Holdings |
| Discover Financial vs. Visa Inc | Discover Financial vs. Visa Inc | Discover Financial vs. American Express | Discover Financial vs. ORIX Corporation |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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