Correlation Between Discover Financial and Ramsay Health
Can any of the company-specific risk be diversified away by investing in both Discover Financial and Ramsay Health 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 Ramsay Health 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 Ramsay Health Care, you can compare the effects of market volatilities on Discover Financial and Ramsay Health 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 Ramsay Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of Discover Financial and Ramsay Health.
Diversification Opportunities for Discover Financial and Ramsay Health
-0.11 | Correlation Coefficient |
Good diversification
The 3 months correlation between Discover and Ramsay is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding Discover Financial Services and Ramsay Health Care in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ramsay Health Care 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 Ramsay Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ramsay Health Care has no effect on the direction of Discover Financial i.e., Discover Financial and Ramsay Health go up and down completely randomly.
Pair Corralation between Discover Financial and Ramsay Health
Assuming the 90 days horizon Discover Financial Services is expected to generate 1.41 times more return on investment than Ramsay Health. However, Discover Financial is 1.41 times more volatile than Ramsay Health Care. It trades about 0.24 of its potential returns per unit of risk. Ramsay Health Care is currently generating about -0.19 per unit of risk. If you would invest 16,780 in Discover Financial Services on October 25, 2024 and sell it today you would earn a total of 1,352 from holding Discover Financial Services or generate 8.06% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Discover Financial Services vs. Ramsay Health Care
Performance |
| Timeline |
| Discover Financial |
| Ramsay Health Care |
Discover Financial and Ramsay Health Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Discover Financial and Ramsay Health
The main advantage of trading using opposite Discover Financial and Ramsay Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Discover Financial position performs unexpectedly, Ramsay Health 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 Ramsay Health will offset losses from the drop in Ramsay Health's long position.| Discover Financial vs. ANGANG STEEL H | Discover Financial vs. CVR Medical Corp | Discover Financial vs. MAANSHAN IRON H | Discover Financial vs. Inspire Medical Systems |
| Ramsay Health vs. CENTURIA OFFICE REIT | Ramsay Health vs. Aegean Airlines SA | Ramsay Health vs. AIR PRODCHEMICALS | Ramsay Health vs. Siamgas And Petrochemicals |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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