Correlation Between Stifel Financial and Discover Financial
Can any of the company-specific risk be diversified away by investing in both Stifel Financial 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 Stifel Financial and Discover Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Stifel Financial and Discover Financial Services, you can compare the effects of market volatilities on Stifel Financial 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 Stifel Financial with a short position of Discover Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Stifel Financial and Discover Financial.
Diversification Opportunities for Stifel Financial and Discover Financial
0.31 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Stifel and Discover is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Stifel Financial and Discover Financial Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Discover Financial and Stifel 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 Stifel Financial 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 Stifel Financial i.e., Stifel Financial and Discover Financial go up and down completely randomly.
Pair Corralation between Stifel Financial and Discover Financial
Allowing for the 90-day total investment horizon Stifel Financial is expected to generate 0.79 times more return on investment than Discover Financial. However, Stifel Financial is 1.27 times less risky than Discover Financial. It trades about 0.17 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 7,614 in Stifel Financial on February 23, 2024 and sell it today you would earn a total of 588.00 from holding Stifel Financial or generate 7.72% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Stifel Financial vs. Discover Financial Services
Performance |
Timeline |
Stifel Financial |
Discover Financial |
Stifel Financial and Discover Financial Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Stifel Financial and Discover Financial
The main advantage of trading using opposite Stifel Financial and Discover Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Stifel Financial 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.Stifel Financial vs. Raymond James Financial | Stifel Financial vs. Evercore Partners | Stifel Financial vs. Selective Insurance Group | Stifel Financial vs. Reinsurance Group of |
Discover Financial vs. Pfizer Inc | Discover Financial vs. Nutrien | Discover Financial vs. Melco Resorts Entertainment | Discover Financial vs. Sandstorm Gold Ltd |
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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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