Correlation Between Synchrony Financial and Prosiebensat
Can any of the company-specific risk be diversified away by investing in both Synchrony Financial and Prosiebensat 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 Prosiebensat into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Synchrony Financial and Prosiebensat 1 Media, you can compare the effects of market volatilities on Synchrony Financial and Prosiebensat 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 Prosiebensat. Check out your portfolio center. Please also check ongoing floating volatility patterns of Synchrony Financial and Prosiebensat.
Diversification Opportunities for Synchrony Financial and Prosiebensat
-0.54 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Synchrony and Prosiebensat is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding Synchrony Financial and Prosiebensat 1 Media in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Prosiebensat 1 Media 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 Prosiebensat. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Prosiebensat 1 Media has no effect on the direction of Synchrony Financial i.e., Synchrony Financial and Prosiebensat go up and down completely randomly.
Pair Corralation between Synchrony Financial and Prosiebensat
Assuming the 90 days trading horizon Synchrony Financial is expected to generate 1.78 times more return on investment than Prosiebensat. However, Synchrony Financial is 1.78 times more volatile than Prosiebensat 1 Media. It trades about 0.21 of its potential returns per unit of risk. Prosiebensat 1 Media is currently generating about -0.37 per unit of risk. If you would invest 5,652 in Synchrony Financial on August 28, 2024 and sell it today you would earn a total of 1,107 from holding Synchrony Financial or generate 19.59% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Synchrony Financial vs. Prosiebensat 1 Media
Performance |
| Timeline |
| Synchrony Financial |
| Prosiebensat 1 Media |
Synchrony Financial and Prosiebensat Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Synchrony Financial and Prosiebensat
The main advantage of trading using opposite Synchrony Financial and Prosiebensat positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Synchrony Financial position performs unexpectedly, Prosiebensat 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 Prosiebensat will offset losses from the drop in Prosiebensat's long position.| Synchrony Financial vs. Samsung Electronics Co | Synchrony Financial vs. Samsung Electronics Co | Synchrony Financial vs. Hyundai Motor | Synchrony Financial vs. Toyota Motor Corp |
| Prosiebensat vs. Samsung Electronics Co | Prosiebensat vs. Samsung Electronics Co | Prosiebensat vs. Hyundai Motor | Prosiebensat vs. Toyota Motor Corp |
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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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