Correlation Between Ecclesiastical Insurance and Discover Financial
Can any of the company-specific risk be diversified away by investing in both Ecclesiastical Insurance 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 Ecclesiastical Insurance and Discover Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ecclesiastical Insurance Office and Discover Financial Services, you can compare the effects of market volatilities on Ecclesiastical Insurance 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 Ecclesiastical Insurance with a short position of Discover Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ecclesiastical Insurance and Discover Financial.
Diversification Opportunities for Ecclesiastical Insurance and Discover Financial
-0.39 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Ecclesiastical and Discover is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Ecclesiastical Insurance Offic and Discover Financial Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Discover Financial and Ecclesiastical Insurance 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 Ecclesiastical Insurance Office 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 Ecclesiastical Insurance i.e., Ecclesiastical Insurance and Discover Financial go up and down completely randomly.
Pair Corralation between Ecclesiastical Insurance and Discover Financial
Assuming the 90 days trading horizon Ecclesiastical Insurance is expected to generate 4.55 times less return on investment than Discover Financial. But when comparing it to its historical volatility, Ecclesiastical Insurance Office is 2.82 times less risky than Discover Financial. It trades about 0.04 of its potential returns per unit of risk. Discover Financial Services is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 9,246 in Discover Financial Services on September 13, 2024 and sell it today you would earn a total of 8,395 from holding Discover Financial Services or generate 90.8% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.57% |
| Values | Daily Returns |
Ecclesiastical Insurance Offic vs. Discover Financial Services
Performance |
| Timeline |
| Ecclesiastical Insurance |
| Discover Financial |
Ecclesiastical Insurance and Discover Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ecclesiastical Insurance and Discover Financial
The main advantage of trading using opposite Ecclesiastical Insurance and Discover Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ecclesiastical Insurance 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.| Ecclesiastical Insurance vs. Samsung Electronics Co | Ecclesiastical Insurance vs. Samsung Electronics Co | Ecclesiastical Insurance vs. Hyundai Motor | Ecclesiastical Insurance vs. Toyota Motor Corp |
| Discover Financial vs. Federal Realty Investment | Discover Financial vs. Jacquet Metal Service | Discover Financial vs. Silvercorp Metals | Discover Financial vs. Kinnevik Investment AB |
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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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