Correlation Between Exchange Bankshares and Discover Financial
Can any of the company-specific risk be diversified away by investing in both Exchange Bankshares 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 Exchange Bankshares and Discover Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Exchange Bankshares and Discover Financial Services, you can compare the effects of market volatilities on Exchange Bankshares 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 Exchange Bankshares with a short position of Discover Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Exchange Bankshares and Discover Financial.
Diversification Opportunities for Exchange Bankshares and Discover Financial
0.43 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Exchange and Discover is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Exchange Bankshares and Discover Financial Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Discover Financial and Exchange Bankshares 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 Exchange Bankshares 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 Exchange Bankshares i.e., Exchange Bankshares and Discover Financial go up and down completely randomly.
Pair Corralation between Exchange Bankshares and Discover Financial
Given the investment horizon of 90 days Exchange Bankshares is expected to generate 0.81 times more return on investment than Discover Financial. However, Exchange Bankshares is 1.24 times less risky than Discover Financial. It trades about 0.3 of its potential returns per unit of risk. Discover Financial Services is currently generating about 0.01 per unit of risk. If you would invest 4,501 in Exchange Bankshares on October 11, 2024 and sell it today you would earn a total of 289.00 from holding Exchange Bankshares or generate 6.42% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 95.24% |
Values | Daily Returns |
Exchange Bankshares vs. Discover Financial Services
Performance |
Timeline |
Exchange Bankshares |
Discover Financial |
Exchange Bankshares and Discover Financial Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Exchange Bankshares and Discover Financial
The main advantage of trading using opposite Exchange Bankshares and Discover Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Exchange Bankshares 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.Exchange Bankshares vs. First Community Financial | Exchange Bankshares vs. National Capital Bank | Exchange Bankshares vs. Oakworth Capital | Exchange Bankshares vs. Truxton |
Discover Financial vs. Ally Financial | Discover Financial vs. Synchrony Financial | Discover Financial vs. Western Union Co | Discover Financial vs. Bread Financial Holdings |
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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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