Correlation Between Aerofoam Metals and Discover Financial
Can any of the company-specific risk be diversified away by investing in both Aerofoam Metals 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 Aerofoam Metals and Discover Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Aerofoam Metals and Discover Financial Services, you can compare the effects of market volatilities on Aerofoam Metals 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 Aerofoam Metals with a short position of Discover Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aerofoam Metals and Discover Financial.
Diversification Opportunities for Aerofoam Metals and Discover Financial
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Aerofoam and Discover is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Aerofoam Metals and Discover Financial Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Discover Financial and Aerofoam Metals 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 Aerofoam Metals 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 Aerofoam Metals i.e., Aerofoam Metals and Discover Financial go up and down completely randomly.
Pair Corralation between Aerofoam Metals and Discover Financial
Given the investment horizon of 90 days Aerofoam Metals is expected to generate 17.25 times more return on investment than Discover Financial. However, Aerofoam Metals is 17.25 times more volatile than Discover Financial Services. It trades about 0.04 of its potential returns per unit of risk. Discover Financial Services is currently generating about 0.09 per unit of risk. If you would invest 0.01 in Aerofoam Metals on August 29, 2024 and sell it today you would earn a total of 0.00 from holding Aerofoam Metals or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Aerofoam Metals vs. Discover Financial Services
Performance |
| Timeline |
| Aerofoam Metals |
| Discover Financial |
Aerofoam Metals and Discover Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aerofoam Metals and Discover Financial
The main advantage of trading using opposite Aerofoam Metals and Discover Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aerofoam Metals 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.| Aerofoam Metals vs. FitLife Brands, Common | Aerofoam Metals vs. HUMANA INC | Aerofoam Metals vs. SCOR PK | Aerofoam Metals vs. Aquagold International |
| Discover Financial vs. Orix Corp Ads | Discover Financial vs. Medallion Financial Corp | Discover Financial vs. Oportun Financial Corp | Discover Financial vs. SLM Corp Pb |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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