Correlation Between Discover Financial and CaliberCos
Can any of the company-specific risk be diversified away by investing in both Discover Financial and CaliberCos 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 CaliberCos 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 CaliberCos Class A, you can compare the effects of market volatilities on Discover Financial and CaliberCos 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 CaliberCos. Check out your portfolio center. Please also check ongoing floating volatility patterns of Discover Financial and CaliberCos.
Diversification Opportunities for Discover Financial and CaliberCos
-0.6 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Discover and CaliberCos is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding Discover Financial Services and CaliberCos Class A in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CaliberCos Class A 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 CaliberCos. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CaliberCos Class A has no effect on the direction of Discover Financial i.e., Discover Financial and CaliberCos go up and down completely randomly.
Pair Corralation between Discover Financial and CaliberCos
Considering the 90-day investment horizon Discover Financial Services is expected to generate 0.51 times more return on investment than CaliberCos. However, Discover Financial Services is 1.98 times less risky than CaliberCos. It trades about 0.17 of its potential returns per unit of risk. CaliberCos Class A is currently generating about -0.02 per unit of risk. If you would invest 12,874 in Discover Financial Services on September 12, 2024 and sell it today you would earn a total of 4,691 from holding Discover Financial Services or generate 36.44% 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. CaliberCos Class A
Performance |
| Timeline |
| Discover Financial |
| CaliberCos Class A |
Discover Financial and CaliberCos Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Discover Financial and CaliberCos
The main advantage of trading using opposite Discover Financial and CaliberCos positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Discover Financial position performs unexpectedly, CaliberCos 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 CaliberCos will offset losses from the drop in CaliberCos' long position.| Discover Financial vs. Ally Financial | Discover Financial vs. Synchrony Financial | Discover Financial vs. Western Union Co | Discover Financial vs. Bread Financial Holdings |
| CaliberCos vs. Contagious Gaming | CaliberCos vs. Newpark Resources | CaliberCos vs. Tritent International Agriculture | CaliberCos vs. Tyson Foods |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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