Correlation Between Synchrony Financial and Faron Pharmaceuticals
Can any of the company-specific risk be diversified away by investing in both Synchrony Financial and Faron Pharmaceuticals 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 Faron Pharmaceuticals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Synchrony Financial and Faron Pharmaceuticals Oy, you can compare the effects of market volatilities on Synchrony Financial and Faron Pharmaceuticals 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 Faron Pharmaceuticals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Synchrony Financial and Faron Pharmaceuticals.
Diversification Opportunities for Synchrony Financial and Faron Pharmaceuticals
0.35 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Synchrony and Faron is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Synchrony Financial and Faron Pharmaceuticals Oy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Faron Pharmaceuticals 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 Faron Pharmaceuticals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Faron Pharmaceuticals has no effect on the direction of Synchrony Financial i.e., Synchrony Financial and Faron Pharmaceuticals go up and down completely randomly.
Pair Corralation between Synchrony Financial and Faron Pharmaceuticals
Assuming the 90 days trading horizon Synchrony Financial is expected to generate 0.77 times more return on investment than Faron Pharmaceuticals. However, Synchrony Financial is 1.3 times less risky than Faron Pharmaceuticals. It trades about 0.08 of its potential returns per unit of risk. Faron Pharmaceuticals Oy is currently generating about -0.37 per unit of risk. If you would invest 6,773 in Synchrony Financial on November 7, 2024 and sell it today you would earn a total of 146.00 from holding Synchrony Financial or generate 2.16% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 90.48% |
| Values | Daily Returns |
Synchrony Financial vs. Faron Pharmaceuticals Oy
Performance |
| Timeline |
| Synchrony Financial |
| Faron Pharmaceuticals |
Synchrony Financial and Faron Pharmaceuticals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Synchrony Financial and Faron Pharmaceuticals
The main advantage of trading using opposite Synchrony Financial and Faron Pharmaceuticals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Synchrony Financial position performs unexpectedly, Faron Pharmaceuticals 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 Faron Pharmaceuticals will offset losses from the drop in Faron Pharmaceuticals' long position.| Synchrony Financial vs. Gamma Communications PLC | Synchrony Financial vs. Spirent Communications plc | Synchrony Financial vs. Chrysalis Investments | Synchrony Financial vs. Canadian General Investments |
| Faron Pharmaceuticals vs. Universal Music Group | Faron Pharmaceuticals vs. Batm Advanced Communications | Faron Pharmaceuticals vs. Gaztransport et Technigaz | Faron Pharmaceuticals vs. Gaming Realms plc |
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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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