Correlation Between Synchrony Financial and Bank of Ireland
Can any of the company-specific risk be diversified away by investing in both Synchrony Financial and Bank of Ireland 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 Bank of Ireland into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Synchrony Financial and Bank of Ireland, you can compare the effects of market volatilities on Synchrony Financial and Bank of Ireland 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 Bank of Ireland. Check out your portfolio center. Please also check ongoing floating volatility patterns of Synchrony Financial and Bank of Ireland.
Diversification Opportunities for Synchrony Financial and Bank of Ireland
-0.76 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Synchrony and Bank is -0.76. Overlapping area represents the amount of risk that can be diversified away by holding Synchrony Financial and Bank of Ireland in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bank of Ireland 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 Bank of Ireland. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bank of Ireland has no effect on the direction of Synchrony Financial i.e., Synchrony Financial and Bank of Ireland go up and down completely randomly.
Pair Corralation between Synchrony Financial and Bank of Ireland
Assuming the 90 days trading horizon Synchrony Financial is expected to generate 1.17 times more return on investment than Bank of Ireland. However, Synchrony Financial is 1.17 times more volatile than Bank of Ireland. It trades about 0.18 of its potential returns per unit of risk. Bank of Ireland is currently generating about -0.08 per unit of risk. If you would invest 4,921 in Synchrony Financial on August 28, 2024 and sell it today you would earn a total of 1,838 from holding Synchrony Financial or generate 37.35% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 98.44% |
| Values | Daily Returns |
Synchrony Financial vs. Bank of Ireland
Performance |
| Timeline |
| Synchrony Financial |
| Bank of Ireland |
Synchrony Financial and Bank of Ireland Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Synchrony Financial and Bank of Ireland
The main advantage of trading using opposite Synchrony Financial and Bank of Ireland positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Synchrony Financial position performs unexpectedly, Bank of Ireland 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 Bank of Ireland will offset losses from the drop in Bank of Ireland'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 |
| Bank of Ireland vs. Primorus Investments plc | Bank of Ireland vs. Livermore Investments Group | Bank of Ireland vs. Nordic Semiconductor ASA | Bank of Ireland vs. Herald Investment Trust |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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