Correlation Between Lendinvest PLC and Discover Financial
Can any of the company-specific risk be diversified away by investing in both Lendinvest PLC 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 Lendinvest PLC and Discover Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lendinvest PLC and Discover Financial Services, you can compare the effects of market volatilities on Lendinvest PLC 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 Lendinvest PLC with a short position of Discover Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lendinvest PLC and Discover Financial.
Diversification Opportunities for Lendinvest PLC and Discover Financial
-0.57 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Lendinvest and Discover is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding Lendinvest PLC and Discover Financial Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Discover Financial and Lendinvest PLC 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 Lendinvest PLC 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 Lendinvest PLC i.e., Lendinvest PLC and Discover Financial go up and down completely randomly.
Pair Corralation between Lendinvest PLC and Discover Financial
Assuming the 90 days trading horizon Lendinvest PLC is expected to generate 10.79 times less return on investment than Discover Financial. But when comparing it to its historical volatility, Lendinvest PLC is 3.69 times less risky than Discover Financial. It trades about 0.08 of its potential returns per unit of risk. Discover Financial Services is currently generating about 0.24 of returns per unit of risk over similar time horizon. If you would invest 15,039 in Discover Financial Services on September 1, 2024 and sell it today you would earn a total of 3,204 from holding Discover Financial Services or generate 21.3% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Lendinvest PLC vs. Discover Financial Services
Performance |
| Timeline |
| Lendinvest PLC |
| Discover Financial |
Lendinvest PLC and Discover Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lendinvest PLC and Discover Financial
The main advantage of trading using opposite Lendinvest PLC and Discover Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lendinvest PLC 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.| Lendinvest PLC vs. Samsung Electronics Co | Lendinvest PLC vs. Samsung Electronics Co | Lendinvest PLC vs. Toyota Motor Corp | Lendinvest PLC vs. Reliance Industries Ltd |
| Discover Financial vs. Uniper SE | Discover Financial vs. Mulberry Group PLC | Discover Financial vs. London Security Plc | Discover Financial vs. Triad Group PLC |
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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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