Correlation Between Discover Financial and Boyd Gaming
Can any of the company-specific risk be diversified away by investing in both Discover Financial and Boyd Gaming 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 Boyd Gaming 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 Boyd Gaming, you can compare the effects of market volatilities on Discover Financial and Boyd Gaming 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 Boyd Gaming. Check out your portfolio center. Please also check ongoing floating volatility patterns of Discover Financial and Boyd Gaming.
Diversification Opportunities for Discover Financial and Boyd Gaming
0.94 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Discover and Boyd is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Discover Financial Services and Boyd Gaming in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Boyd Gaming 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 Boyd Gaming. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Boyd Gaming has no effect on the direction of Discover Financial i.e., Discover Financial and Boyd Gaming go up and down completely randomly.
Pair Corralation between Discover Financial and Boyd Gaming
Assuming the 90 days horizon Discover Financial Services is expected to generate 0.8 times more return on investment than Boyd Gaming. However, Discover Financial Services is 1.25 times less risky than Boyd Gaming. It trades about 0.11 of its potential returns per unit of risk. Boyd Gaming is currently generating about -0.04 per unit of risk. If you would invest 16,608 in Discover Financial Services on October 11, 2024 and sell it today you would earn a total of 378.00 from holding Discover Financial Services or generate 2.28% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Discover Financial Services vs. Boyd Gaming
Performance |
| Timeline |
| Discover Financial |
| Boyd Gaming |
Discover Financial and Boyd Gaming Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Discover Financial and Boyd Gaming
The main advantage of trading using opposite Discover Financial and Boyd Gaming positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Discover Financial position performs unexpectedly, Boyd Gaming 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 Boyd Gaming will offset losses from the drop in Boyd Gaming's long position.| Discover Financial vs. Xenia Hotels Resorts | Discover Financial vs. MHP Hotel AG | Discover Financial vs. Boyd Gaming | Discover Financial vs. ScanSource |
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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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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