Correlation Between Discover Financial and Grupo Carso
Can any of the company-specific risk be diversified away by investing in both Discover Financial and Grupo Carso 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 Grupo Carso 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 Grupo Carso SAB, you can compare the effects of market volatilities on Discover Financial and Grupo Carso 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 Grupo Carso. Check out your portfolio center. Please also check ongoing floating volatility patterns of Discover Financial and Grupo Carso.
Diversification Opportunities for Discover Financial and Grupo Carso
0.08 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Discover and Grupo is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding Discover Financial Services and Grupo Carso SAB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Grupo Carso SAB 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 Grupo Carso. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Grupo Carso SAB has no effect on the direction of Discover Financial i.e., Discover Financial and Grupo Carso go up and down completely randomly.
Pair Corralation between Discover Financial and Grupo Carso
Assuming the 90 days horizon Discover Financial Services is expected to generate 1.09 times more return on investment than Grupo Carso. However, Discover Financial is 1.09 times more volatile than Grupo Carso SAB. It trades about 0.33 of its potential returns per unit of risk. Grupo Carso SAB is currently generating about 0.19 per unit of risk. If you would invest 16,986 in Discover Financial Services on November 7, 2024 and sell it today you would earn a total of 2,450 from holding Discover Financial Services or generate 14.42% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.24% |
| Values | Daily Returns |
Discover Financial Services vs. Grupo Carso SAB
Performance |
| Timeline |
| Discover Financial |
| Grupo Carso SAB |
Discover Financial and Grupo Carso Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Discover Financial and Grupo Carso
The main advantage of trading using opposite Discover Financial and Grupo Carso positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Discover Financial position performs unexpectedly, Grupo Carso 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 Grupo Carso will offset losses from the drop in Grupo Carso's long position.| Discover Financial vs. Visa Inc | Discover Financial vs. Mastercard | Discover Financial vs. Mastercard | Discover Financial vs. American Express |
| Grupo Carso vs. Honeywell International | Grupo Carso vs. Mitsubishi | Grupo Carso vs. Hitachi | Grupo Carso vs. ITOCHU |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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