Correlation Between Imax Corp and Discover Financial
Can any of the company-specific risk be diversified away by investing in both Imax Corp 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 Imax Corp and Discover Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Imax Corp and Discover Financial Services, you can compare the effects of market volatilities on Imax Corp 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 Imax Corp with a short position of Discover Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Imax Corp and Discover Financial.
Diversification Opportunities for Imax Corp and Discover Financial
0.16 | Correlation Coefficient |
Average diversification
The 3 months correlation between Imax and Discover is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding Imax Corp and Discover Financial Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Discover Financial and Imax Corp 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 Imax Corp 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 Imax Corp i.e., Imax Corp and Discover Financial go up and down completely randomly.
Pair Corralation between Imax Corp and Discover Financial
Given the investment horizon of 90 days Imax Corp is expected to under-perform the Discover Financial. But the stock apears to be less risky and, when comparing its historical volatility, Imax Corp is 1.4 times less risky than Discover Financial. The stock trades about -0.07 of its potential returns per unit of risk. The Discover Financial Services is currently generating about 0.32 of returns per unit of risk over similar time horizon. If you would invest 17,921 in Discover Financial Services on November 5, 2024 and sell it today you would earn a total of 2,188 from holding Discover Financial Services or generate 12.21% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Imax Corp vs. Discover Financial Services
Performance |
| Timeline |
| Imax Corp |
| Discover Financial |
Imax Corp and Discover Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Imax Corp and Discover Financial
The main advantage of trading using opposite Imax Corp and Discover Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Imax Corp 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.| Imax Corp vs. Marcus | Imax Corp vs. Dave Busters Entertainment | Imax Corp vs. AMC Networks | Imax Corp vs. News Corp A |
| Discover Financial vs. Ally Financial | Discover Financial vs. Synchrony Financial | Discover Financial vs. Western Union Co | Discover Financial vs. Bread Financial 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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