Correlation Between Identiv and Discover Financial
Can any of the company-specific risk be diversified away by investing in both Identiv 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 Identiv and Discover Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Identiv and Discover Financial Services, you can compare the effects of market volatilities on Identiv 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 Identiv with a short position of Discover Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Identiv and Discover Financial.
Diversification Opportunities for Identiv and Discover Financial
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Identiv and Discover is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Identiv and Discover Financial Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Discover Financial and Identiv 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 Identiv 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 Identiv i.e., Identiv and Discover Financial go up and down completely randomly.
Pair Corralation between Identiv and Discover Financial
Assuming the 90 days trading horizon Identiv is expected to under-perform the Discover Financial. In addition to that, Identiv is 1.77 times more volatile than Discover Financial Services. It trades about -0.01 of its total potential returns per unit of risk. Discover Financial Services is currently generating about 0.06 per unit of volatility. If you would invest 9,306 in Discover Financial Services on October 12, 2024 and sell it today you would earn a total of 7,790 from holding Discover Financial Services or generate 83.71% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.8% |
| Values | Daily Returns |
Identiv vs. Discover Financial Services
Performance |
| Timeline |
| Identiv |
| Discover Financial |
Identiv and Discover Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Identiv and Discover Financial
The main advantage of trading using opposite Identiv and Discover Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Identiv 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.| Identiv vs. CAIRN HOMES EO | Identiv vs. Neinor Homes SA | Identiv vs. Taylor Morrison Home | Identiv vs. DFS Furniture PLC |
| Discover Financial vs. Platinum Investment Management | Discover Financial vs. Sims Metal Management | Discover Financial vs. Brockhaus Capital Management | Discover Financial vs. British American Tobacco |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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