Correlation Between Sea and DISCOVER
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By analyzing existing cross correlation between Sea and DISCOVER FINL SVCS, you can compare the effects of market volatilities on Sea and DISCOVER 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 Sea with a short position of DISCOVER. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sea and DISCOVER.
Diversification Opportunities for Sea and DISCOVER
Very poor diversification
The 3 months correlation between Sea and DISCOVER is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Sea and DISCOVER FINL SVCS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DISCOVER FINL SVCS and Sea 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 Sea are associated (or correlated) with DISCOVER. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DISCOVER FINL SVCS has no effect on the direction of Sea i.e., Sea and DISCOVER go up and down completely randomly.
Pair Corralation between Sea and DISCOVER
Allowing for the 90-day total investment horizon Sea is expected to generate 12.51 times more return on investment than DISCOVER. However, Sea is 12.51 times more volatile than DISCOVER FINL SVCS. It trades about 0.07 of its potential returns per unit of risk. DISCOVER FINL SVCS is currently generating about 0.04 per unit of risk. If you would invest 6,338 in Sea on September 1, 2024 and sell it today you would earn a total of 5,042 from holding Sea or generate 79.55% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 92.47% |
| Values | Daily Returns |
Sea vs. DISCOVER FINL SVCS
Performance |
| Timeline |
| Sea |
| DISCOVER FINL SVCS |
Sea and DISCOVER Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sea and DISCOVER
The main advantage of trading using opposite Sea and DISCOVER positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sea position performs unexpectedly, DISCOVER 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 will offset losses from the drop in DISCOVER's long position.The idea behind Sea and DISCOVER FINL SVCS pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| DISCOVER vs. Turning Point Brands | DISCOVER vs. Diamond Estates Wines | DISCOVER vs. Northstar Clean Technologies | DISCOVER vs. Ecoloclean Industrs |
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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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