Correlation Between Discover Financial and PennantPark Floating
Can any of the company-specific risk be diversified away by investing in both Discover Financial and PennantPark Floating 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 PennantPark Floating 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 PennantPark Floating Rate, you can compare the effects of market volatilities on Discover Financial and PennantPark Floating 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 PennantPark Floating. Check out your portfolio center. Please also check ongoing floating volatility patterns of Discover Financial and PennantPark Floating.
Diversification Opportunities for Discover Financial and PennantPark Floating
-0.09 | Correlation Coefficient |
Good diversification
The 3 months correlation between Discover and PennantPark is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding Discover Financial Services and PennantPark Floating Rate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PennantPark Floating Rate 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 PennantPark Floating. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PennantPark Floating Rate has no effect on the direction of Discover Financial i.e., Discover Financial and PennantPark Floating go up and down completely randomly.
Pair Corralation between Discover Financial and PennantPark Floating
Considering the 90-day investment horizon Discover Financial Services is expected to generate 6.0 times more return on investment than PennantPark Floating. However, Discover Financial is 6.0 times more volatile than PennantPark Floating Rate. It trades about 0.2 of its potential returns per unit of risk. PennantPark Floating Rate is currently generating about -0.14 per unit of risk. If you would invest 14,830 in Discover Financial Services on August 26, 2024 and sell it today you would earn a total of 3,099 from holding Discover Financial Services or generate 20.9% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Discover Financial Services vs. PennantPark Floating Rate
Performance |
| Timeline |
| Discover Financial |
| PennantPark Floating Rate |
Discover Financial and PennantPark Floating Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Discover Financial and PennantPark Floating
The main advantage of trading using opposite Discover Financial and PennantPark Floating positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Discover Financial position performs unexpectedly, PennantPark Floating 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 PennantPark Floating will offset losses from the drop in PennantPark Floating'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 |
| PennantPark Floating vs. PowerUp Acquisition Corp | PennantPark Floating vs. Aurora Innovation | PennantPark Floating vs. HUMANA INC | PennantPark Floating vs. Aquagold International |
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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.
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