Correlation Between Ruffer Investment and Discover Financial
Can any of the company-specific risk be diversified away by investing in both Ruffer Investment 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 Ruffer Investment and Discover Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ruffer Investment and Discover Financial Services, you can compare the effects of market volatilities on Ruffer Investment 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 Ruffer Investment with a short position of Discover Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ruffer Investment and Discover Financial.
Diversification Opportunities for Ruffer Investment and Discover Financial
0.58 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Ruffer and Discover is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Ruffer Investment and Discover Financial Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Discover Financial and Ruffer Investment 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 Ruffer Investment 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 Ruffer Investment i.e., Ruffer Investment and Discover Financial go up and down completely randomly.
Pair Corralation between Ruffer Investment and Discover Financial
Assuming the 90 days trading horizon Ruffer Investment is expected to generate 12.28 times less return on investment than Discover Financial. But when comparing it to its historical volatility, Ruffer Investment is 4.15 times less risky than Discover Financial. It trades about 0.03 of its potential returns per unit of risk. Discover Financial Services is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 8,679 in Discover Financial Services on December 13, 2024 and sell it today you would earn a total of 7,088 from holding Discover Financial Services or generate 81.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 97.33% |
| Values | Daily Returns |
Ruffer Investment vs. Discover Financial Services
Performance |
| Timeline |
| Ruffer Investment |
| Discover Financial |
Ruffer Investment and Discover Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ruffer Investment and Discover Financial
The main advantage of trading using opposite Ruffer Investment and Discover Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ruffer Investment 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.| Ruffer Investment vs. Vitec Software Group | ||
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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 CEOs Directory module to screen CEOs from public companies around the world.
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