Correlation Between Discover Financial and NewtekOne, 800

Can any of the company-specific risk be diversified away by investing in both Discover Financial and NewtekOne, 800 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 NewtekOne, 800 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 NewtekOne, 800 percent, you can compare the effects of market volatilities on Discover Financial and NewtekOne, 800 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 NewtekOne, 800. Check out your portfolio center. Please also check ongoing floating volatility patterns of Discover Financial and NewtekOne, 800.

Diversification Opportunities for Discover Financial and NewtekOne, 800

0.32

Correlation Coefficient

Discover Financial  NewtekOne, 800

Weak diversification

The 3 months correlation between Discover and NewtekOne, is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Discover Financial Services and NewtekOne, 800 percent in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NewtekOne, 800 percent 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 NewtekOne, 800. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NewtekOne, 800 percent has no effect on the direction of Discover Financial i.e., Discover Financial and NewtekOne, 800 go up and down completely randomly.

Pair Corralation between Discover Financial and NewtekOne, 800

Considering the 90-day investment horizon Discover Financial Services is expected to generate 4.6 times more return on investment than NewtekOne, 800. However, Discover Financial is 4.6 times more volatile than NewtekOne, 800 percent. It trades about 0.08 of its potential returns per unit of risk. NewtekOne, 800 percent is currently generating about 0.08 per unit of risk. If you would invest  17,584  in Discover Financial Services on December 4, 2024 and sell it today you would earn a total of  1,443  from holding Discover Financial Services or generate 8.21% 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.  NewtekOne, 800 percent

Discover Financial

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Discover Financial Services are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak technical and fundamental indicators, Discover Financial may actually be approaching a critical reversion point that can send shares even higher in April 2025.

NewtekOne, 800 percent

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in NewtekOne, 800 percent are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong basic indicators, NewtekOne, 800 is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Discover Financial and NewtekOne, 800

The main advantage of trading using opposite Discover Financial and NewtekOne, 800 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Discover Financial position performs unexpectedly, NewtekOne, 800 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 NewtekOne, 800 will offset losses from the drop in NewtekOne, 800's long position.

The idea behind Discover Financial Services and NewtekOne, 800 percent 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.

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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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.