Correlation Between Discover Financial and Artisan Partners
Can any of the company-specific risk be diversified away by investing in both Discover Financial and Artisan Partners 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 Artisan Partners 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 Artisan Partners Asset, you can compare the effects of market volatilities on Discover Financial and Artisan Partners 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 Artisan Partners. Check out your portfolio center. Please also check ongoing floating volatility patterns of Discover Financial and Artisan Partners.
Diversification Opportunities for Discover Financial and Artisan Partners
0.94 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Discover and Artisan is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Discover Financial Services and Artisan Partners Asset in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Artisan Partners Asset 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 Artisan Partners. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Artisan Partners Asset has no effect on the direction of Discover Financial i.e., Discover Financial and Artisan Partners go up and down completely randomly.
Pair Corralation between Discover Financial and Artisan Partners
Considering the 90-day investment horizon Discover Financial Services is expected to generate 1.35 times more return on investment than Artisan Partners. However, Discover Financial is 1.35 times more volatile than Artisan Partners Asset. It trades about 0.07 of its potential returns per unit of risk. Artisan Partners Asset is currently generating about 0.06 per unit of risk. If you would invest 11,213 in Discover Financial Services on August 28, 2024 and sell it today you would earn a total of 7,054 from holding Discover Financial Services or generate 62.91% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Discover Financial Services vs. Artisan Partners Asset
Performance |
| Timeline |
| Discover Financial |
| Artisan Partners Asset |
Discover Financial and Artisan Partners Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Discover Financial and Artisan Partners
The main advantage of trading using opposite Discover Financial and Artisan Partners positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Discover Financial position performs unexpectedly, Artisan Partners 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 Artisan Partners will offset losses from the drop in Artisan Partners' long position.| Discover Financial vs. Orix Corp Ads | Discover Financial vs. Medallion Financial Corp | Discover Financial vs. Oportun Financial Corp | Discover Financial vs. SLM Corp Pb |
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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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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