Correlation Between Discover Financial and Applied Materials,
Can any of the company-specific risk be diversified away by investing in both Discover Financial and Applied Materials, 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 Discover Financial and Applied Materials, into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Discover Financial Services and Applied Materials,, you can compare the effects of market volatilities on Discover Financial and Applied Materials, 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 Discover Financial with a short position of Applied Materials,. Check out your portfolio center. Please also check ongoing floating volatility patterns of Discover Financial and Applied Materials,.
Diversification Opportunities for Discover Financial and Applied Materials,
0.53 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Discover and Applied is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Discover Financial Services and Applied Materials, in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Applied Materials, and Discover Financial 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 Discover Financial Services are associated (or correlated) with Applied Materials,. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Applied Materials, has no effect on the direction of Discover Financial i.e., Discover Financial and Applied Materials, go up and down completely randomly.
Pair Corralation between Discover Financial and Applied Materials,
Assuming the 90 days trading horizon Discover Financial Services is expected to generate 1.61 times more return on investment than Applied Materials,. However, Discover Financial is 1.61 times more volatile than Applied Materials,. It trades about 0.36 of its potential returns per unit of risk. Applied Materials, is currently generating about 0.03 per unit of risk. If you would invest 41,833 in Discover Financial Services on October 30, 2024 and sell it today you would earn a total of 17,891 from holding Discover Financial Services or generate 42.77% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Discover Financial Services vs. Applied Materials,
Performance |
| Timeline |
| Discover Financial |
| Applied Materials, |
Discover Financial and Applied Materials, Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Discover Financial and Applied Materials,
The main advantage of trading using opposite Discover Financial and Applied Materials, positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Discover Financial position performs unexpectedly, Applied Materials, 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 Applied Materials, will offset losses from the drop in Applied Materials,'s long position.| Discover Financial vs. Fidelity National Information | Discover Financial vs. G2D Investments | Discover Financial vs. DXC Technology | Discover Financial vs. United Natural Foods, |
| Applied Materials, vs. LPL Financial Holdings | Applied Materials, vs. Verizon Communications | Applied Materials, vs. HDFC Bank Limited | Applied Materials, vs. Ameriprise Financial |
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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