Correlation Between Discover Financial and Uber Technologies
Can any of the company-specific risk be diversified away by investing in both Discover Financial and Uber Technologies 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 Uber Technologies 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 Uber Technologies, you can compare the effects of market volatilities on Discover Financial and Uber Technologies 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 Uber Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Discover Financial and Uber Technologies.
Diversification Opportunities for Discover Financial and Uber Technologies
-0.18 | Correlation Coefficient |
Good diversification
The 3 months correlation between Discover and Uber is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding Discover Financial Services and Uber Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Uber Technologies 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 Uber Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Uber Technologies has no effect on the direction of Discover Financial i.e., Discover Financial and Uber Technologies go up and down completely randomly.
Pair Corralation between Discover Financial and Uber Technologies
Considering the 90-day investment horizon Discover Financial Services is expected to generate 2.59 times more return on investment than Uber Technologies. However, Discover Financial is 2.59 times more volatile than Uber Technologies. It trades about 0.23 of its potential returns per unit of risk. Uber Technologies is currently generating about 0.01 per unit of risk. If you would invest 14,783 in Discover Financial Services on September 1, 2024 and sell it today you would earn a total of 3,460 from holding Discover Financial Services or generate 23.41% 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. Uber Technologies
Performance |
| Timeline |
| Discover Financial |
| Uber Technologies |
Discover Financial and Uber Technologies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Discover Financial and Uber Technologies
The main advantage of trading using opposite Discover Financial and Uber Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Discover Financial position performs unexpectedly, Uber Technologies 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 Uber Technologies will offset losses from the drop in Uber Technologies' long position.| Discover Financial vs. Ally Financial | Discover Financial vs. Synchrony Financial | Discover Financial vs. Western Union Co | Discover Financial vs. Bread Financial Holdings |
| Uber Technologies vs. Zoom Video Communications | Uber Technologies vs. Snowflake | Uber Technologies vs. Workday | Uber Technologies vs. C3 Ai Inc |
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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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