Correlation Between Discover Financial and CANON MARKETING
Can any of the company-specific risk be diversified away by investing in both Discover Financial and CANON MARKETING 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 CANON MARKETING 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 CANON MARKETING JP, you can compare the effects of market volatilities on Discover Financial and CANON MARKETING 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 CANON MARKETING. Check out your portfolio center. Please also check ongoing floating volatility patterns of Discover Financial and CANON MARKETING.
Diversification Opportunities for Discover Financial and CANON MARKETING
0.4 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Discover and CANON is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Discover Financial Services and CANON MARKETING JP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CANON MARKETING JP 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 CANON MARKETING. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CANON MARKETING JP has no effect on the direction of Discover Financial i.e., Discover Financial and CANON MARKETING go up and down completely randomly.
Pair Corralation between Discover Financial and CANON MARKETING
Assuming the 90 days horizon Discover Financial Services is expected to generate 1.61 times more return on investment than CANON MARKETING. However, Discover Financial is 1.61 times more volatile than CANON MARKETING JP. It trades about 0.07 of its potential returns per unit of risk. CANON MARKETING JP is currently generating about 0.06 per unit of risk. If you would invest 10,183 in Discover Financial Services on November 5, 2024 and sell it today you would earn a total of 9,077 from holding Discover Financial Services or generate 89.14% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Discover Financial Services vs. CANON MARKETING JP
Performance |
| Timeline |
| Discover Financial |
| CANON MARKETING JP |
Discover Financial and CANON MARKETING Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Discover Financial and CANON MARKETING
The main advantage of trading using opposite Discover Financial and CANON MARKETING positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Discover Financial position performs unexpectedly, CANON MARKETING 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 CANON MARKETING will offset losses from the drop in CANON MARKETING'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 |
| CANON MARKETING vs. FAST RETAIL ADR | CANON MARKETING vs. Indutrade AB | CANON MARKETING vs. Verizon Communications | CANON MARKETING vs. TELECOM ITALRISP ADR10 |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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