Correlation Between Triad Group and Discover Financial
Can any of the company-specific risk be diversified away by investing in both Triad Group 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 Triad Group and Discover Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Triad Group PLC and Discover Financial Services, you can compare the effects of market volatilities on Triad Group 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 Triad Group with a short position of Discover Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Triad Group and Discover Financial.
Diversification Opportunities for Triad Group and Discover Financial
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Triad and Discover is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Triad Group 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 Triad Group 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 Triad Group 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 Triad Group i.e., Triad Group and Discover Financial go up and down completely randomly.
Pair Corralation between Triad Group and Discover Financial
Assuming the 90 days trading horizon Triad Group PLC is expected to under-perform the Discover Financial. But the stock apears to be less risky and, when comparing its historical volatility, Triad Group PLC is 1.7 times less risky than Discover Financial. The stock trades about -0.07 of its potential returns per unit of risk. The Discover Financial Services is currently generating about 0.27 of returns per unit of risk over similar time horizon. If you would invest 14,810 in Discover Financial Services on September 3, 2024 and sell it today you would earn a total of 3,433 from holding Discover Financial Services or generate 23.18% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 95.24% |
| Values | Daily Returns |
Triad Group PLC vs. Discover Financial Services
Performance |
| Timeline |
| Triad Group PLC |
| Discover Financial |
Triad Group and Discover Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Triad Group and Discover Financial
The main advantage of trading using opposite Triad Group and Discover Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Triad Group 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.| Triad Group vs. Global Net Lease | Triad Group vs. Discover Financial Services | Triad Group vs. MyHealthChecked Plc | Triad Group vs. Inspiration Healthcare Group |
| Discover Financial vs. Catalyst Media Group | Discover Financial vs. CATLIN GROUP | Discover Financial vs. Magnora ASA | Discover Financial vs. RTW Venture Fund |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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