Correlation Between Uber Technologies and Discover Financial
Can any of the company-specific risk be diversified away by investing in both Uber Technologies 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 Uber Technologies and Discover Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Uber Technologies and Discover Financial Services, you can compare the effects of market volatilities on Uber Technologies 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 Uber Technologies with a short position of Discover Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Uber Technologies and Discover Financial.
Diversification Opportunities for Uber Technologies and Discover Financial
-0.18 | Correlation Coefficient |
Good diversification
The 3 months correlation between Uber and Discover is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding Uber Technologies and Discover Financial Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Discover Financial and Uber Technologies 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 Uber Technologies 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 Uber Technologies i.e., Uber Technologies and Discover Financial go up and down completely randomly.
Pair Corralation between Uber Technologies and Discover Financial
Given the investment horizon of 90 days Uber Technologies is expected to generate 109.16 times less return on investment than Discover Financial. But when comparing it to its historical volatility, Uber Technologies is 2.59 times less risky than Discover Financial. It trades about 0.01 of its potential returns per unit of risk. Discover Financial Services is currently generating about 0.23 of returns per unit of risk over similar time horizon. If you would invest 14,783 in Discover Financial Services on September 1, 2024 and sell it today you would earn a total of 3,460 from holding Discover Financial Services or generate 23.41% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Uber Technologies vs. Discover Financial Services
Performance |
| Timeline |
| Uber Technologies |
| Discover Financial |
Uber Technologies and Discover Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Uber Technologies and Discover Financial
The main advantage of trading using opposite Uber Technologies and Discover Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Uber Technologies 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.| Uber Technologies vs. Zoom Video Communications | Uber Technologies vs. Snowflake | Uber Technologies vs. Workday | Uber Technologies vs. C3 Ai Inc |
| 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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