Correlation Between Discover Financial and Grenke AG
Can any of the company-specific risk be diversified away by investing in both Discover Financial and Grenke AG 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 Grenke AG 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 Grenke AG, you can compare the effects of market volatilities on Discover Financial and Grenke AG 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 Grenke AG. Check out your portfolio center. Please also check ongoing floating volatility patterns of Discover Financial and Grenke AG.
Diversification Opportunities for Discover Financial and Grenke AG
-0.78 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Discover and Grenke is -0.78. Overlapping area represents the amount of risk that can be diversified away by holding Discover Financial Services and Grenke AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Grenke AG 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 Grenke AG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Grenke AG has no effect on the direction of Discover Financial i.e., Discover Financial and Grenke AG go up and down completely randomly.
Pair Corralation between Discover Financial and Grenke AG
Assuming the 90 days horizon Discover Financial Services is expected to generate 0.97 times more return on investment than Grenke AG. However, Discover Financial Services is 1.03 times less risky than Grenke AG. It trades about 0.06 of its potential returns per unit of risk. Grenke AG is currently generating about -0.01 per unit of risk. If you would invest 9,444 in Discover Financial Services on September 4, 2024 and sell it today you would earn a total of 7,714 from holding Discover Financial Services or generate 81.68% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Discover Financial Services vs. Grenke AG
Performance |
| Timeline |
| Discover Financial |
| Grenke AG |
Discover Financial and Grenke AG Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Discover Financial and Grenke AG
The main advantage of trading using opposite Discover Financial and Grenke AG positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Discover Financial position performs unexpectedly, Grenke AG 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 Grenke AG will offset losses from the drop in Grenke AG's long position.| Discover Financial vs. TSOGO SUN GAMING | Discover Financial vs. Scientific Games | Discover Financial vs. QINGCI GAMES INC | Discover Financial vs. ANGLER GAMING PLC |
| Grenke AG vs. Visa Inc | Grenke AG vs. Visa Inc | Grenke AG vs. American Express | Grenke AG vs. ORIX Corporation |
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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