Correlation Between Discover Financial and Imax Corp
Can any of the company-specific risk be diversified away by investing in both Discover Financial and Imax Corp 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 Imax Corp 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 Imax Corp, you can compare the effects of market volatilities on Discover Financial and Imax Corp 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 Imax Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Discover Financial and Imax Corp.
Diversification Opportunities for Discover Financial and Imax Corp
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Discover and Imax is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Discover Financial Services and Imax Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Imax Corp 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 Imax Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Imax Corp has no effect on the direction of Discover Financial i.e., Discover Financial and Imax Corp go up and down completely randomly.
Pair Corralation between Discover Financial and Imax Corp
Considering the 90-day investment horizon Discover Financial Services is expected to generate 1.38 times more return on investment than Imax Corp. However, Discover Financial is 1.38 times more volatile than Imax Corp. It trades about 0.16 of its potential returns per unit of risk. Imax Corp is currently generating about 0.12 per unit of risk. If you would invest 15,226 in Discover Financial Services on October 26, 2024 and sell it today you would earn a total of 4,870 from holding Discover Financial Services or generate 31.98% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Discover Financial Services vs. Imax Corp
Performance |
| Timeline |
| Discover Financial |
| Imax Corp |
Discover Financial and Imax Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Discover Financial and Imax Corp
The main advantage of trading using opposite Discover Financial and Imax Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Discover Financial position performs unexpectedly, Imax Corp 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 Imax Corp will offset losses from the drop in Imax Corp's long position.| Discover Financial vs. Visa Class A | Discover Financial vs. PayPal Holdings | Discover Financial vs. Capital One Financial | Discover Financial vs. Upstart Holdings |
| Imax Corp vs. Marcus | Imax Corp vs. Dave Busters Entertainment | Imax Corp vs. AMC Networks | Imax Corp vs. News Corp A |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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