Correlation Between Discover Financial and Yuexiu Transport
Can any of the company-specific risk be diversified away by investing in both Discover Financial and Yuexiu Transport 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 Yuexiu Transport 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 Yuexiu Transport Infrastructure, you can compare the effects of market volatilities on Discover Financial and Yuexiu Transport 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 Yuexiu Transport. Check out your portfolio center. Please also check ongoing floating volatility patterns of Discover Financial and Yuexiu Transport.
Diversification Opportunities for Discover Financial and Yuexiu Transport
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Discover and Yuexiu is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Discover Financial Services and Yuexiu Transport Infrastructur in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Yuexiu Transport Inf 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 Yuexiu Transport. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Yuexiu Transport Inf has no effect on the direction of Discover Financial i.e., Discover Financial and Yuexiu Transport go up and down completely randomly.
Pair Corralation between Discover Financial and Yuexiu Transport
Considering the 90-day investment horizon Discover Financial is expected to generate 1.64 times less return on investment than Yuexiu Transport. But when comparing it to its historical volatility, Discover Financial Services is 1.22 times less risky than Yuexiu Transport. It trades about 0.07 of its potential returns per unit of risk. Yuexiu Transport Infrastructure is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 20.00 in Yuexiu Transport Infrastructure on August 29, 2024 and sell it today you would earn a total of 38.00 from holding Yuexiu Transport Infrastructure or generate 190.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Discover Financial Services vs. Yuexiu Transport Infrastructur
Performance |
| Timeline |
| Discover Financial |
| Yuexiu Transport Inf |
Discover Financial and Yuexiu Transport Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Discover Financial and Yuexiu Transport
The main advantage of trading using opposite Discover Financial and Yuexiu Transport positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Discover Financial position performs unexpectedly, Yuexiu Transport 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 Yuexiu Transport will offset losses from the drop in Yuexiu Transport's 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 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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