Correlation Between Discover Financial and Monster Beverage
Can any of the company-specific risk be diversified away by investing in both Discover Financial and Monster Beverage 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 Monster Beverage 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 Monster Beverage, you can compare the effects of market volatilities on Discover Financial and Monster Beverage 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 Monster Beverage. Check out your portfolio center. Please also check ongoing floating volatility patterns of Discover Financial and Monster Beverage.
Diversification Opportunities for Discover Financial and Monster Beverage
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Discover and Monster is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Discover Financial Services and Monster Beverage in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Monster Beverage 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 Monster Beverage. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Monster Beverage has no effect on the direction of Discover Financial i.e., Discover Financial and Monster Beverage go up and down completely randomly.
Pair Corralation between Discover Financial and Monster Beverage
If you would invest 41,833 in Discover Financial Services on October 11, 2024 and sell it today you would earn a total of 0.00 from holding Discover Financial Services or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Discover Financial Services vs. Monster Beverage
Performance |
| Timeline |
| Discover Financial |
| Monster Beverage |
Discover Financial and Monster Beverage Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Discover Financial and Monster Beverage
The main advantage of trading using opposite Discover Financial and Monster Beverage positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Discover Financial position performs unexpectedly, Monster Beverage 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 Monster Beverage will offset losses from the drop in Monster Beverage's long position.| Discover Financial vs. Visa Inc | Discover Financial vs. Mastercard Incorporated | Discover Financial vs. American Express | Discover Financial vs. PayPal Holdings |
| Monster Beverage vs. Citizens Financial Group, | Monster Beverage vs. Ameriprise Financial | Monster Beverage vs. Broadridge Financial Solutions, | Monster Beverage vs. Discover Financial Services |
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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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