Correlation Between WESTERN DIGITAL and Discover Financial
Can any of the company-specific risk be diversified away by investing in both WESTERN DIGITAL 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 WESTERN DIGITAL and Discover Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between WESTERN DIGITAL and Discover Financial Services, you can compare the effects of market volatilities on WESTERN DIGITAL 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 WESTERN DIGITAL with a short position of Discover Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of WESTERN DIGITAL and Discover Financial.
Diversification Opportunities for WESTERN DIGITAL and Discover Financial
0.26 | Correlation Coefficient |
Modest diversification
The 3 months correlation between WESTERN and Discover is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding WESTERN DIGITAL and Discover Financial Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Discover Financial and WESTERN DIGITAL 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 WESTERN DIGITAL 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 WESTERN DIGITAL i.e., WESTERN DIGITAL and Discover Financial go up and down completely randomly.
Pair Corralation between WESTERN DIGITAL and Discover Financial
Assuming the 90 days trading horizon WESTERN DIGITAL is expected to generate 1.09 times more return on investment than Discover Financial. However, WESTERN DIGITAL is 1.09 times more volatile than Discover Financial Services. It trades about 0.37 of its potential returns per unit of risk. Discover Financial Services is currently generating about 0.24 per unit of risk. If you would invest 5,815 in WESTERN DIGITAL on October 25, 2024 and sell it today you would earn a total of 801.00 from holding WESTERN DIGITAL or generate 13.77% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
WESTERN DIGITAL vs. Discover Financial Services
Performance |
| Timeline |
| WESTERN DIGITAL |
| Discover Financial |
WESTERN DIGITAL and Discover Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with WESTERN DIGITAL and Discover Financial
The main advantage of trading using opposite WESTERN DIGITAL and Discover Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if WESTERN DIGITAL 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.| WESTERN DIGITAL vs. Discover Financial Services | WESTERN DIGITAL vs. Erste Group Bank | WESTERN DIGITAL vs. MICRONIC MYDATA | WESTERN DIGITAL vs. BANK OF CHINA |
| Discover Financial vs. ANGANG STEEL H | Discover Financial vs. CVR Medical Corp | Discover Financial vs. MAANSHAN IRON H | Discover Financial vs. Inspire Medical Systems |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
Other Complementary Tools
| Bonds Directory Find actively traded corporate debentures issued by US companies | |
| Portfolio Dashboard Portfolio dashboard that provides centralized access to all your investments | |
| Positions Ratings Determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Money Flow Index Determine momentum by analyzing Money Flow Index and other technical indicators | |
| Financial Widgets Easily integrated Macroaxis content with over 30 different plug-and-play financial widgets |