Correlation Between Discover Financial and Coca Cola
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By analyzing existing cross correlation between Discover Financial Services and The Coca Cola, you can compare the effects of market volatilities on Discover Financial and Coca Cola 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 Coca Cola. Check out your portfolio center. Please also check ongoing floating volatility patterns of Discover Financial and Coca Cola.
Diversification Opportunities for Discover Financial and Coca Cola
0.12 | Correlation Coefficient |
Average diversification
The 3 months correlation between Discover and Coca is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding Discover Financial Services and The Coca Cola in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Coca Cola 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 Coca Cola. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Coca Cola has no effect on the direction of Discover Financial i.e., Discover Financial and Coca Cola go up and down completely randomly.
Pair Corralation between Discover Financial and Coca Cola
Assuming the 90 days horizon Discover Financial Services is expected to generate 2.57 times more return on investment than Coca Cola. However, Discover Financial is 2.57 times more volatile than The Coca Cola. It trades about 0.33 of its potential returns per unit of risk. The Coca Cola is currently generating about 0.28 per unit of risk. If you would invest 16,986 in Discover Financial Services on November 6, 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 | 100.0% |
| Values | Daily Returns |
Discover Financial Services vs. The Coca Cola
Performance |
| Timeline |
| Discover Financial |
| Coca Cola |
Discover Financial and Coca Cola Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Discover Financial and Coca Cola
The main advantage of trading using opposite Discover Financial and Coca Cola positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Discover Financial position performs unexpectedly, Coca Cola 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 Coca Cola will offset losses from the drop in Coca Cola's long position.| Discover Financial vs. Take Two Interactive Software | Discover Financial vs. ATOSS SOFTWARE | Discover Financial vs. Advanced Medical Solutions | Discover Financial vs. OPERA SOFTWARE |
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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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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