Correlation Between Discover Financial and Jefferies Financial
Can any of the company-specific risk be diversified away by investing in both Discover Financial and Jefferies 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 Discover Financial and Jefferies Financial 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 Jefferies Financial Group, you can compare the effects of market volatilities on Discover Financial and Jefferies 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 Discover Financial with a short position of Jefferies Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Discover Financial and Jefferies Financial.
Diversification Opportunities for Discover Financial and Jefferies Financial
0.07 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Discover and Jefferies is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Discover Financial Services and Jefferies Financial Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jefferies Financial 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 Jefferies Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jefferies Financial has no effect on the direction of Discover Financial i.e., Discover Financial and Jefferies Financial go up and down completely randomly.
Pair Corralation between Discover Financial and Jefferies Financial
Assuming the 90 days trading horizon Discover Financial Services is expected to generate 1.98 times more return on investment than Jefferies Financial. However, Discover Financial is 1.98 times more volatile than Jefferies Financial Group. It trades about 0.32 of its potential returns per unit of risk. Jefferies Financial Group is currently generating about -0.11 per unit of risk. If you would invest 41,833 in Discover Financial Services on November 3, 2024 and sell it today you would earn a total of 17,747 from holding Discover Financial Services or generate 42.42% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Discover Financial Services vs. Jefferies Financial Group
Performance |
| Timeline |
| Discover Financial |
| Jefferies Financial |
Discover Financial and Jefferies Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Discover Financial and Jefferies Financial
The main advantage of trading using opposite Discover Financial and Jefferies Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Discover Financial position performs unexpectedly, Jefferies 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 Jefferies Financial will offset losses from the drop in Jefferies Financial's long position.| Discover Financial vs. Visa Inc | Discover Financial vs. Mastercard Incorporated | Discover Financial vs. American Express | Discover Financial vs. PayPal Holdings |
| Jefferies Financial vs. Global X Funds | Jefferies Financial vs. G2D Investments | Jefferies Financial vs. Hormel Foods | Jefferies Financial vs. Academy Sports and |
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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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