Correlation Between Discover Financial and Silvercrest Asset
Can any of the company-specific risk be diversified away by investing in both Discover Financial and Silvercrest Asset 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 Silvercrest Asset 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 Silvercrest Asset Management, you can compare the effects of market volatilities on Discover Financial and Silvercrest Asset 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 Silvercrest Asset. Check out your portfolio center. Please also check ongoing floating volatility patterns of Discover Financial and Silvercrest Asset.
Diversification Opportunities for Discover Financial and Silvercrest Asset
0.45 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Discover and Silvercrest is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Discover Financial Services and Silvercrest Asset Management in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Silvercrest Asset 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 Silvercrest Asset. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Silvercrest Asset has no effect on the direction of Discover Financial i.e., Discover Financial and Silvercrest Asset go up and down completely randomly.
Pair Corralation between Discover Financial and Silvercrest Asset
Considering the 90-day investment horizon Discover Financial Services is expected to generate 1.11 times more return on investment than Silvercrest Asset. However, Discover Financial is 1.11 times more volatile than Silvercrest Asset Management. It trades about 0.07 of its potential returns per unit of risk. Silvercrest Asset Management is currently generating about 0.04 per unit of risk. If you would invest 12,248 in Discover Financial Services on December 7, 2024 and sell it today you would earn a total of 5,019 from holding Discover Financial Services or generate 40.98% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Discover Financial Services vs. Silvercrest Asset Management
Performance |
| Timeline |
| Discover Financial |
| Silvercrest Asset |
Discover Financial and Silvercrest Asset Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Discover Financial and Silvercrest Asset
The main advantage of trading using opposite Discover Financial and Silvercrest Asset positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Discover Financial position performs unexpectedly, Silvercrest Asset 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 Silvercrest Asset will offset losses from the drop in Silvercrest Asset'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 |
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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 Stocks Directory module to find actively traded stocks across global markets.
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