Correlation Between Discover Financial and Molson Coors
Can any of the company-specific risk be diversified away by investing in both Discover Financial and Molson Coors 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 Molson Coors 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 Molson Coors Brewing, you can compare the effects of market volatilities on Discover Financial and Molson Coors 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 Molson Coors. Check out your portfolio center. Please also check ongoing floating volatility patterns of Discover Financial and Molson Coors.
Diversification Opportunities for Discover Financial and Molson Coors
0.26 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Discover and Molson is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Discover Financial Services and Molson Coors Brewing in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Molson Coors Brewing 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 Molson Coors. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Molson Coors Brewing has no effect on the direction of Discover Financial i.e., Discover Financial and Molson Coors go up and down completely randomly.
Pair Corralation between Discover Financial and Molson Coors
Considering the 90-day investment horizon Discover Financial Services is expected to generate 2.01 times more return on investment than Molson Coors. However, Discover Financial is 2.01 times more volatile than Molson Coors Brewing. It trades about 0.17 of its potential returns per unit of risk. Molson Coors Brewing is currently generating about 0.0 per unit of risk. If you would invest 15,013 in Discover Financial Services on October 29, 2024 and sell it today you would earn a total of 5,197 from holding Discover Financial Services or generate 34.62% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Discover Financial Services vs. Molson Coors Brewing
Performance |
| Timeline |
| Discover Financial |
| Molson Coors Brewing |
Discover Financial and Molson Coors Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Discover Financial and Molson Coors
The main advantage of trading using opposite Discover Financial and Molson Coors positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Discover Financial position performs unexpectedly, Molson Coors 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 Molson Coors will offset losses from the drop in Molson Coors' 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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