Correlation Between Synchrony Financial and Commerzbank
Can any of the company-specific risk be diversified away by investing in both Synchrony Financial and Commerzbank 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 Commerzbank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Synchrony Financial and Commerzbank AG, you can compare the effects of market volatilities on Synchrony Financial and Commerzbank 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 Commerzbank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Synchrony Financial and Commerzbank.
Diversification Opportunities for Synchrony Financial and Commerzbank
0.36 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Synchrony and Commerzbank is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Synchrony Financial and Commerzbank AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Commerzbank AG 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 Commerzbank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Commerzbank AG has no effect on the direction of Synchrony Financial i.e., Synchrony Financial and Commerzbank go up and down completely randomly.
Pair Corralation between Synchrony Financial and Commerzbank
Assuming the 90 days trading horizon Synchrony Financial is expected to generate 3.23 times less return on investment than Commerzbank. In addition to that, Synchrony Financial is 1.53 times more volatile than Commerzbank AG. It trades about 0.14 of its total potential returns per unit of risk. Commerzbank AG is currently generating about 0.69 per unit of volatility. If you would invest 1,578 in Commerzbank AG on November 4, 2024 and sell it today you would earn a total of 285.00 from holding Commerzbank AG or generate 18.06% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 90.91% |
| Values | Daily Returns |
Synchrony Financial vs. Commerzbank AG
Performance |
| Timeline |
| Synchrony Financial |
| Commerzbank AG |
Synchrony Financial and Commerzbank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Synchrony Financial and Commerzbank
The main advantage of trading using opposite Synchrony Financial and Commerzbank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Synchrony Financial position performs unexpectedly, Commerzbank 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 Commerzbank will offset losses from the drop in Commerzbank's long position.| Synchrony Financial vs. Infineon Technologies AG | Synchrony Financial vs. Learning Technologies Group | Synchrony Financial vs. Automatic Data Processing | Synchrony Financial vs. Extra Space Storage |
| Commerzbank vs. Sartorius Stedim Biotech | Commerzbank vs. Premier Foods PLC | Commerzbank vs. Take Two Interactive Software | Commerzbank vs. Polar Capital Technology |
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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