Correlation Between Discover Financial and Premier African
Can any of the company-specific risk be diversified away by investing in both Discover Financial and Premier African 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 Discover Financial and Premier African into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Discover Financial Services and Premier African Minerals, you can compare the effects of market volatilities on Discover Financial and Premier African 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 Discover Financial with a short position of Premier African. Check out your portfolio center. Please also check ongoing floating volatility patterns of Discover Financial and Premier African.
Diversification Opportunities for Discover Financial and Premier African
0.2 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Discover and Premier is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Discover Financial Services and Premier African Minerals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Premier African Minerals and Discover Financial 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 Discover Financial Services are associated (or correlated) with Premier African. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Premier African Minerals has no effect on the direction of Discover Financial i.e., Discover Financial and Premier African go up and down completely randomly.
Pair Corralation between Discover Financial and Premier African
Assuming the 90 days trading horizon Discover Financial is expected to generate 2.01 times less return on investment than Premier African. But when comparing it to its historical volatility, Discover Financial Services is 3.96 times less risky than Premier African. It trades about 0.14 of its potential returns per unit of risk. Premier African Minerals is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 3.30 in Premier African Minerals on October 10, 2024 and sell it today you would earn a total of 0.70 from holding Premier African Minerals or generate 21.21% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Discover Financial Services vs. Premier African Minerals
Performance |
Timeline |
Discover Financial |
Premier African Minerals |
Discover Financial and Premier African Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Discover Financial and Premier African
The main advantage of trading using opposite Discover Financial and Premier African positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Discover Financial position performs unexpectedly, Premier African 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 Premier African will offset losses from the drop in Premier African's long position.Discover Financial vs. Wheaton Precious Metals | Discover Financial vs. Universal Music Group | Discover Financial vs. Qurate Retail Series | Discover Financial vs. Ecclesiastical Insurance Office |
Premier African vs. Gear4music Plc | Premier African vs. Symphony Environmental Technologies | Premier African vs. Coeur Mining | Premier African vs. Capital Metals PLC |
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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.
Other Complementary Tools
Competition Analyzer Analyze and compare many basic indicators for a group of related or unrelated entities | |
Price Ceiling Movement Calculate and plot Price Ceiling Movement for different equity instruments | |
Equity Forecasting Use basic forecasting models to generate price predictions and determine price momentum | |
Content Syndication Quickly integrate customizable finance content to your own investment portal | |
Idea Optimizer Use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio |