Correlation Between Discover Financial and Western Copper
Can any of the company-specific risk be diversified away by investing in both Discover Financial and Western Copper 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 Western Copper 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 Western Copper and, you can compare the effects of market volatilities on Discover Financial and Western Copper 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 Western Copper. Check out your portfolio center. Please also check ongoing floating volatility patterns of Discover Financial and Western Copper.
Diversification Opportunities for Discover Financial and Western Copper
-0.57 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Discover and Western is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding Discover Financial Services and Western Copper and in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Western Copper 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 Western Copper. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Western Copper has no effect on the direction of Discover Financial i.e., Discover Financial and Western Copper go up and down completely randomly.
Pair Corralation between Discover Financial and Western Copper
Assuming the 90 days horizon Discover Financial Services is expected to generate 0.78 times more return on investment than Western Copper. However, Discover Financial Services is 1.28 times less risky than Western Copper. It trades about 0.07 of its potential returns per unit of risk. Western Copper and is currently generating about -0.01 per unit of risk. If you would invest 10,117 in Discover Financial Services on November 6, 2024 and sell it today you would earn a total of 9,319 from holding Discover Financial Services or generate 92.11% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Discover Financial Services vs. Western Copper and
Performance |
| Timeline |
| Discover Financial |
| Western Copper |
Discover Financial and Western Copper Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Discover Financial and Western Copper
The main advantage of trading using opposite Discover Financial and Western Copper positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Discover Financial position performs unexpectedly, Western Copper 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 Western Copper will offset losses from the drop in Western Copper's long position.| Discover Financial vs. Geely Automobile Holdings | Discover Financial vs. PENN Entertainment | Discover Financial vs. Commercial Vehicle Group | Discover Financial vs. Motorcar Parts of |
| Western Copper vs. ON SEMICONDUCTOR | Western Copper vs. TOREX SEMICONDUCTOR LTD | Western Copper vs. FLOW TRADERS LTD | Western Copper vs. Siamgas And Petrochemicals |
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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