Correlation Between Asure Software and Discover Financial

Can any of the company-specific risk be diversified away by investing in both Asure Software 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 Asure Software and Discover Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Asure Software and Discover Financial Services, you can compare the effects of market volatilities on Asure Software 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 Asure Software with a short position of Discover Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Asure Software and Discover Financial.

Diversification Opportunities for Asure Software and Discover Financial

0.37

Correlation Coefficient

Asure Software  Discover Financial

Weak diversification

The 3 months correlation between Asure and Discover is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Asure Software and Discover Financial Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Discover Financial and Asure Software 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 Asure Software 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 Asure Software i.e., Asure Software and Discover Financial go up and down completely randomly.

Pair Corralation between Asure Software and Discover Financial

Given the investment horizon of 90 days Asure Software is expected to generate 10.2 times less return on investment than Discover Financial. But when comparing it to its historical volatility, Asure Software is 1.01 times less risky than Discover Financial. It trades about 0.01 of its potential returns per unit of risk. Discover Financial Services is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest  13,592  in Discover Financial Services on September 24, 2024 and sell it today you would earn a total of  3,724  from holding Discover Financial Services or generate 27.4% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Asure Software  vs.  Discover Financial Services

Asure Software

Risk-Adjusted Performance

1 of 100

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Asure Software are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable basic indicators, Asure Software is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Discover Financial

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Discover Financial Services are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak technical and fundamental indicators, Discover Financial unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Asure Software and Discover Financial

The main advantage of trading using opposite Asure Software and Discover Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Asure Software 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.

The idea behind Asure Software and Discover Financial Services 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.