Correlation Between National CineMedia and Discover Financial
Can any of the company-specific risk be diversified away by investing in both National CineMedia 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 National CineMedia and Discover Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between National CineMedia and Discover Financial Services, you can compare the effects of market volatilities on National CineMedia 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 National CineMedia with a short position of Discover Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of National CineMedia and Discover Financial.
Diversification Opportunities for National CineMedia and Discover Financial
-0.31 | Correlation Coefficient |
Very good diversification
The 3 months correlation between National and Discover is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding National CineMedia and Discover Financial Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Discover Financial and National CineMedia 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 National CineMedia 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 National CineMedia i.e., National CineMedia and Discover Financial go up and down completely randomly.
Pair Corralation between National CineMedia and Discover Financial
Given the investment horizon of 90 days National CineMedia is expected to under-perform the Discover Financial. In addition to that, National CineMedia is 1.41 times more volatile than Discover Financial Services. It trades about -0.02 of its total potential returns per unit of risk. Discover Financial Services is currently generating about 0.32 per unit of volatility. 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 Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
National CineMedia vs. Discover Financial Services
Performance |
| Timeline |
| National CineMedia |
| Discover Financial |
National CineMedia and Discover Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with National CineMedia and Discover Financial
The main advantage of trading using opposite National CineMedia and Discover Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if National CineMedia 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.| National CineMedia vs. MGO Global Common | National CineMedia vs. Baosheng Media Group | National CineMedia vs. Glory Star New | National CineMedia vs. Impact Fusion International |
| 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
Other Complementary Tools
| Competition Analyzer Analyze and compare many basic indicators for a group of related or unrelated entities | |
| ETF Categories List of ETF categories grouped based on various criteria, such as the investment strategy or type of investments | |
| Content Syndication Quickly integrate customizable finance content to your own investment portal | |
| Idea Optimizer Use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio | |
| Options Analysis Analyze and evaluate options and option chains as a potential hedge for your portfolios |