Correlation Between ELMOS SEMICONDUCTOR and Discover Financial
Can any of the company-specific risk be diversified away by investing in both ELMOS SEMICONDUCTOR and Discover Financial 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 ELMOS SEMICONDUCTOR and Discover Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ELMOS SEMICONDUCTOR and Discover Financial Services, you can compare the effects of market volatilities on ELMOS SEMICONDUCTOR and Discover Financial 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 ELMOS SEMICONDUCTOR with a short position of Discover Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of ELMOS SEMICONDUCTOR and Discover Financial.
Diversification Opportunities for ELMOS SEMICONDUCTOR and Discover Financial
0.29 | Correlation Coefficient |
Modest diversification
The 3 months correlation between ELMOS and Discover is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding ELMOS SEMICONDUCTOR and Discover Financial Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Discover Financial and ELMOS SEMICONDUCTOR 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 ELMOS SEMICONDUCTOR are associated (or correlated) with Discover Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Discover Financial has no effect on the direction of ELMOS SEMICONDUCTOR i.e., ELMOS SEMICONDUCTOR and Discover Financial go up and down completely randomly.
Pair Corralation between ELMOS SEMICONDUCTOR and Discover Financial
Assuming the 90 days trading horizon ELMOS SEMICONDUCTOR is expected to generate 1.73 times less return on investment than Discover Financial. In addition to that, ELMOS SEMICONDUCTOR is 1.22 times more volatile than Discover Financial Services. It trades about 0.03 of its total potential returns per unit of risk. Discover Financial Services is currently generating about 0.07 per unit of volatility. If you would invest 8,883 in Discover Financial Services on October 11, 2024 and sell it today you would earn a total of 8,197 from holding Discover Financial Services or generate 92.28% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
ELMOS SEMICONDUCTOR vs. Discover Financial Services
Performance |
| Timeline |
| ELMOS SEMICONDUCTOR |
| Discover Financial |
ELMOS SEMICONDUCTOR and Discover Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ELMOS SEMICONDUCTOR and Discover Financial
The main advantage of trading using opposite ELMOS SEMICONDUCTOR and Discover Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ELMOS SEMICONDUCTOR position performs unexpectedly, Discover Financial 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 Discover Financial will offset losses from the drop in Discover Financial's long position.| ELMOS SEMICONDUCTOR vs. Osisko Metals | ELMOS SEMICONDUCTOR vs. Shenandoah Telecommunications | ELMOS SEMICONDUCTOR vs. Nippon Light Metal | ELMOS SEMICONDUCTOR vs. DAIDO METAL TD |
| Discover Financial vs. Xenia Hotels Resorts | Discover Financial vs. MHP Hotel AG | Discover Financial vs. Boyd Gaming | Discover Financial vs. ScanSource |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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