Correlation Between Discover Financial and KYN Capital
Can any of the company-specific risk be diversified away by investing in both Discover Financial and KYN Capital 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 KYN Capital 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 KYN Capital Group, you can compare the effects of market volatilities on Discover Financial and KYN Capital 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 KYN Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Discover Financial and KYN Capital.
Diversification Opportunities for Discover Financial and KYN Capital
-0.55 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Discover and KYN is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding Discover Financial Services and KYN Capital Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KYN Capital Group 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 KYN Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KYN Capital Group has no effect on the direction of Discover Financial i.e., Discover Financial and KYN Capital go up and down completely randomly.
Pair Corralation between Discover Financial and KYN Capital
Considering the 90-day investment horizon Discover Financial Services is expected to generate 0.45 times more return on investment than KYN Capital. However, Discover Financial Services is 2.2 times less risky than KYN Capital. It trades about 0.18 of its potential returns per unit of risk. KYN Capital Group is currently generating about -0.03 per unit of risk. If you would invest 13,972 in Discover Financial Services on August 31, 2024 and sell it today you would earn a total of 4,284 from holding Discover Financial Services or generate 30.66% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Discover Financial Services vs. KYN Capital Group
Performance |
| Timeline |
| Discover Financial |
| KYN Capital Group |
Discover Financial and KYN Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Discover Financial and KYN Capital
The main advantage of trading using opposite Discover Financial and KYN Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Discover Financial position performs unexpectedly, KYN Capital 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 KYN Capital will offset losses from the drop in KYN Capital's long position.| Discover Financial vs. Ally Financial | Discover Financial vs. Synchrony Financial | Discover Financial vs. Western Union Co | Discover Financial vs. Bread Financial Holdings |
| KYN Capital vs. Visa Class A | KYN Capital vs. Mastercard | KYN Capital vs. American Express | KYN Capital vs. PayPal Holdings |
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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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