Correlation Between Discover Financial and MQGAU

Can any of the company-specific risk be diversified away by investing in both Discover Financial and MQGAU 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 MQGAU 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 MQGAU 5376057 23 SEP 27, you can compare the effects of market volatilities on Discover Financial and MQGAU 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 MQGAU. Check out your portfolio center. Please also check ongoing floating volatility patterns of Discover Financial and MQGAU.

Diversification Opportunities for Discover Financial and MQGAU

0.11

Correlation Coefficient

Discover Financial  MQGAU

Average diversification

The 3 months correlation between Discover and MQGAU is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding Discover Financial Services and MQGAU 5376057 23 SEP 27 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MQGAU 5376057 23 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 MQGAU. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MQGAU 5376057 23 has no effect on the direction of Discover Financial i.e., Discover Financial and MQGAU go up and down completely randomly.

Pair Corralation between Discover Financial and MQGAU

Considering the 90-day investment horizon Discover Financial Services is expected to under-perform the MQGAU. In addition to that, Discover Financial is 59.02 times more volatile than MQGAU 5376057 23 SEP 27. It trades about -0.03 of its total potential returns per unit of risk. MQGAU 5376057 23 SEP 27 is currently generating about -0.05 per unit of volatility. If you would invest  10,047  in MQGAU 5376057 23 SEP 27 on December 24, 2024 and sell it today you would lose (3.00) from holding MQGAU 5376057 23 SEP 27 or give up 0.03% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	21.31%
Values	Daily Returns

Discover Financial Services  vs.  MQGAU 5376057 23 SEP 27

Discover Financial

Risk-Adjusted Performance

Very Weak

Over the last 90 days Discover Financial Services has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable technical and fundamental indicators, Discover Financial is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

MQGAU 5376057 23

Risk-Adjusted Performance

Very Weak

Over the last 90 days MQGAU 5376057 23 SEP 27 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, MQGAU is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Discover Financial and MQGAU

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

The idea behind Discover Financial Services and MQGAU 5376057 23 SEP 27 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.