Correlation Between FIH MOBILE and Discover Financial
Can any of the company-specific risk be diversified away by investing in both FIH MOBILE 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 FIH MOBILE and Discover Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between FIH MOBILE and Discover Financial Services, you can compare the effects of market volatilities on FIH MOBILE 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 FIH MOBILE with a short position of Discover Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of FIH MOBILE and Discover Financial.
Diversification Opportunities for FIH MOBILE and Discover Financial
0.58 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between FIH and Discover is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding FIH MOBILE and Discover Financial Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Discover Financial and FIH MOBILE 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 FIH MOBILE 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 FIH MOBILE i.e., FIH MOBILE and Discover Financial go up and down completely randomly.
Pair Corralation between FIH MOBILE and Discover Financial
If you would invest 16,594 in Discover Financial Services on October 30, 2024 and sell it today you would earn a total of 2,474 from holding Discover Financial Services or generate 14.91% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
FIH MOBILE vs. Discover Financial Services
Performance |
| Timeline |
| FIH MOBILE |
| Discover Financial |
FIH MOBILE and Discover Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with FIH MOBILE and Discover Financial
The main advantage of trading using opposite FIH MOBILE and Discover Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FIH MOBILE 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.| FIH MOBILE vs. NAKED WINES PLC | FIH MOBILE vs. Goodyear Tire Rubber | FIH MOBILE vs. Entravision Communications | FIH MOBILE vs. Kingdee International Software |
| Discover Financial vs. Visa Inc | Discover Financial vs. Mastercard | Discover Financial vs. PayPal Holdings |
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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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