Correlation Between Charter Communications and Discover Financial
Can any of the company-specific risk be diversified away by investing in both Charter Communications 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 Charter Communications and Discover Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Charter Communications and Discover Financial Services, you can compare the effects of market volatilities on Charter Communications 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 Charter Communications with a short position of Discover Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Charter Communications and Discover Financial.
Diversification Opportunities for Charter Communications and Discover Financial
-0.63 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Charter and Discover is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding Charter Communications and Discover Financial Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Discover Financial and Charter Communications 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 Charter Communications 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 Charter Communications i.e., Charter Communications and Discover Financial go up and down completely randomly.
Pair Corralation between Charter Communications and Discover Financial
Assuming the 90 days trading horizon Charter Communications is expected to generate 7.7 times less return on investment than Discover Financial. In addition to that, Charter Communications is 1.08 times more volatile than Discover Financial Services. It trades about 0.01 of its total potential returns per unit of risk. Discover Financial Services is currently generating about 0.08 per unit of volatility. If you would invest 29,107 in Discover Financial Services on November 5, 2024 and sell it today you would earn a total of 30,473 from holding Discover Financial Services or generate 104.69% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 98.99% |
| Values | Daily Returns |
Charter Communications vs. Discover Financial Services
Performance |
| Timeline |
| Charter Communications |
| Discover Financial |
Charter Communications and Discover Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Charter Communications and Discover Financial
The main advantage of trading using opposite Charter Communications and Discover Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Charter Communications 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.The idea behind Charter Communications and Discover Financial Services pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
| Discover Financial vs. METISA Metalrgica Timboense | Discover Financial vs. Annaly Capital Management, | Discover Financial vs. Caesars Entertainment, | Discover Financial vs. Trane Technologies plc |
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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
Other Complementary Tools
| Share Portfolio Track or share privately all of your investments from the convenience of any device | |
| Portfolio Comparator Compare the composition, asset allocations and performance of any two portfolios in your account | |
| Sync Your Broker Sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors. | |
| Cryptocurrency Center Build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency | |
| Earnings Calls Check upcoming earnings announcements updated hourly across public exchanges |