Correlation Between Discover Financial and TSOGO SUN
Can any of the company-specific risk be diversified away by investing in both Discover Financial and TSOGO SUN 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 TSOGO SUN 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 TSOGO SUN GAMING, you can compare the effects of market volatilities on Discover Financial and TSOGO SUN 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 TSOGO SUN. Check out your portfolio center. Please also check ongoing floating volatility patterns of Discover Financial and TSOGO SUN.
Diversification Opportunities for Discover Financial and TSOGO SUN
-0.51 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Discover and TSOGO is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding Discover Financial Services and TSOGO SUN GAMING in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TSOGO SUN 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 TSOGO SUN. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TSOGO SUN GAMING has no effect on the direction of Discover Financial i.e., Discover Financial and TSOGO SUN go up and down completely randomly.
Pair Corralation between Discover Financial and TSOGO SUN
Assuming the 90 days horizon Discover Financial Services is expected to generate 1.35 times more return on investment than TSOGO SUN. However, Discover Financial is 1.35 times more volatile than TSOGO SUN GAMING. It trades about 0.13 of its potential returns per unit of risk. TSOGO SUN GAMING is currently generating about 0.03 per unit of risk. If you would invest 11,220 in Discover Financial Services on September 12, 2024 and sell it today you would earn a total of 5,388 from holding Discover Financial Services or generate 48.02% 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. TSOGO SUN GAMING
Performance |
| Timeline |
| Discover Financial |
| TSOGO SUN GAMING |
Discover Financial and TSOGO SUN Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Discover Financial and TSOGO SUN
The main advantage of trading using opposite Discover Financial and TSOGO SUN positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Discover Financial position performs unexpectedly, TSOGO SUN 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 TSOGO SUN will offset losses from the drop in TSOGO SUN's long position.| Discover Financial vs. Taylor Morrison Home | Discover Financial vs. CARSALESCOM | Discover Financial vs. KB HOME | Discover Financial vs. HomeToGo SE |
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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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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