Correlation Between Discover Financial and Uber Technologies

Specify exactly 2 symbols:
Can any of the company-specific risk be diversified away by investing in both Discover Financial and Uber Technologies 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 Uber Technologies 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 Uber Technologies, you can compare the effects of market volatilities on Discover Financial and Uber Technologies 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 Uber Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Discover Financial and Uber Technologies.

Diversification Opportunities for Discover Financial and Uber Technologies

-0.6
  Correlation Coefficient

Excellent diversification

The 3 months correlation between Discover and Uber is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding Discover Financial Services and Uber Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Uber Technologies 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 Uber Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Uber Technologies has no effect on the direction of Discover Financial i.e., Discover Financial and Uber Technologies go up and down completely randomly.

Pair Corralation between Discover Financial and Uber Technologies

Considering the 90-day investment horizon Discover Financial Services is expected to generate 1.13 times more return on investment than Uber Technologies. However, Discover Financial is 1.13 times more volatile than Uber Technologies. It trades about 0.11 of its potential returns per unit of risk. Uber Technologies is currently generating about -0.11 per unit of risk. If you would invest  14,334  in Discover Financial Services on September 19, 2024 and sell it today you would earn a total of  3,054  from holding Discover Financial Services or generate 21.31% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

Discover Financial Services  vs.  Uber Technologies

 Performance 
       Timeline  
Discover Financial 

Risk-Adjusted Performance

8 of 100

 
Weak
 
Strong
Good
Compared to the overall equity markets, risk-adjusted returns on investments in Discover Financial Services are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively abnormal technical and fundamental indicators, Discover Financial unveiled solid returns over the last few months and may actually be approaching a breakup point.
Uber Technologies 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Uber Technologies has generated negative risk-adjusted returns adding no value to investors with long positions. Even with unfluctuating performance in the last few months, the Stock's technical and fundamental indicators remain relatively invariable which may send shares a bit higher in January 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Discover Financial and Uber Technologies Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Discover Financial and Uber Technologies

The main advantage of trading using opposite Discover Financial and Uber Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Discover Financial position performs unexpectedly, Uber Technologies 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 Uber Technologies will offset losses from the drop in Uber Technologies' long position.
The idea behind Discover Financial Services and Uber Technologies 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.
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.

Other Complementary Tools

Bond Analysis
Evaluate and analyze corporate bonds as a potential investment for your portfolios.
Pattern Recognition
Use different Pattern Recognition models to time the market across multiple global exchanges
Pair Correlation
Compare performance and examine fundamental relationship between any two equity instruments
Competition Analyzer
Analyze and compare many basic indicators for a group of related or unrelated entities
Equity Forecasting
Use basic forecasting models to generate price predictions and determine price momentum