Correlation Between Synchrony Financial and AFLAC
Can any of the company-specific risk be diversified away by investing in both Synchrony Financial and AFLAC 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 Synchrony Financial and AFLAC into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Synchrony Financial and AFLAC Inc, you can compare the effects of market volatilities on Synchrony Financial and AFLAC 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 Synchrony Financial with a short position of AFLAC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Synchrony Financial and AFLAC.
Diversification Opportunities for Synchrony Financial and AFLAC
-0.1 | Correlation Coefficient |
Good diversification
The 3 months correlation between Synchrony and AFLAC is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding Synchrony Financial and AFLAC Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AFLAC Inc and Synchrony 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 Synchrony Financial are associated (or correlated) with AFLAC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AFLAC Inc has no effect on the direction of Synchrony Financial i.e., Synchrony Financial and AFLAC go up and down completely randomly.
Pair Corralation between Synchrony Financial and AFLAC
Assuming the 90 days trading horizon Synchrony Financial is expected to generate 0.92 times more return on investment than AFLAC. However, Synchrony Financial is 1.09 times less risky than AFLAC. It trades about 0.16 of its potential returns per unit of risk. AFLAC Inc is currently generating about -0.15 per unit of risk. If you would invest 6,582 in Synchrony Financial on September 14, 2024 and sell it today you would earn a total of 281.00 from holding Synchrony Financial or generate 4.27% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Synchrony Financial vs. AFLAC Inc
Performance |
| Timeline |
| Synchrony Financial |
| AFLAC Inc |
Synchrony Financial and AFLAC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Synchrony Financial and AFLAC
The main advantage of trading using opposite Synchrony Financial and AFLAC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Synchrony Financial position performs unexpectedly, AFLAC 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 AFLAC will offset losses from the drop in AFLAC's long position.| Synchrony Financial vs. Samsung Electronics Co | Synchrony Financial vs. Samsung Electronics Co | Synchrony Financial vs. Hyundai Motor | Synchrony Financial vs. Reliance Industries Ltd |
| AFLAC vs. Liberty Media Corp | AFLAC vs. Check Point Software | AFLAC vs. MediaZest plc | AFLAC vs. Centaur Media |
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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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