Correlation Between Carlyle and Discover Financial
Can any of the company-specific risk be diversified away by investing in both Carlyle 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 Carlyle and Discover Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Carlyle Group and Discover Financial Services, you can compare the effects of market volatilities on Carlyle 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 Carlyle with a short position of Discover Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Carlyle and Discover Financial.
Diversification Opportunities for Carlyle and Discover Financial
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Carlyle and Discover is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Carlyle Group and Discover Financial Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Discover Financial and Carlyle 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 Carlyle Group 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 Carlyle i.e., Carlyle and Discover Financial go up and down completely randomly.
Pair Corralation between Carlyle and Discover Financial
Allowing for the 90-day total investment horizon Carlyle is expected to generate 4.29 times less return on investment than Discover Financial. But when comparing it to its historical volatility, Carlyle Group is 1.8 times less risky than Discover Financial. It trades about 0.08 of its potential returns per unit of risk. Discover Financial Services is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest 15,387 in Discover Financial Services on August 31, 2024 and sell it today you would earn a total of 2,869 from holding Discover Financial Services or generate 18.65% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Carlyle Group vs. Discover Financial Services
Performance |
| Timeline |
| Carlyle Group |
| Discover Financial |
Carlyle and Discover Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Carlyle and Discover Financial
The main advantage of trading using opposite Carlyle and Discover Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Carlyle 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.| Carlyle vs. Apollo Global Management | Carlyle vs. Blackstone Group | Carlyle vs. Brookfield Asset Management | Carlyle vs. Ares Management LP |
| Discover Financial vs. Ally Financial | Discover Financial vs. Synchrony Financial | Discover Financial vs. Western Union Co | Discover Financial vs. Bread Financial Holdings |
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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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