Correlation Between Synchrony Financial and Flutter Entertainment
Can any of the company-specific risk be diversified away by investing in both Synchrony Financial and Flutter Entertainment 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 Flutter Entertainment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Synchrony Financial and Flutter Entertainment PLC, you can compare the effects of market volatilities on Synchrony Financial and Flutter Entertainment 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 Flutter Entertainment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Synchrony Financial and Flutter Entertainment.
Diversification Opportunities for Synchrony Financial and Flutter Entertainment
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Synchrony and Flutter is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Synchrony Financial and Flutter Entertainment PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Flutter Entertainment PLC 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 Flutter Entertainment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Flutter Entertainment PLC has no effect on the direction of Synchrony Financial i.e., Synchrony Financial and Flutter Entertainment go up and down completely randomly.
Pair Corralation between Synchrony Financial and Flutter Entertainment
Assuming the 90 days trading horizon Synchrony Financial is expected to generate 1.03 times more return on investment than Flutter Entertainment. However, Synchrony Financial is 1.03 times more volatile than Flutter Entertainment PLC. It trades about 0.16 of its potential returns per unit of risk. Flutter Entertainment PLC is currently generating about 0.1 per unit of risk. If you would invest 2,911 in Synchrony Financial on September 14, 2024 and sell it today you would earn a total of 3,952 from holding Synchrony Financial or generate 135.76% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 97.06% |
| Values | Daily Returns |
Synchrony Financial vs. Flutter Entertainment PLC
Performance |
| Timeline |
| Synchrony Financial |
| Flutter Entertainment PLC |
Synchrony Financial and Flutter Entertainment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Synchrony Financial and Flutter Entertainment
The main advantage of trading using opposite Synchrony Financial and Flutter Entertainment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Synchrony Financial position performs unexpectedly, Flutter Entertainment 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 Flutter Entertainment will offset losses from the drop in Flutter Entertainment'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 |
| Flutter Entertainment vs. Erste Group Bank | Flutter Entertainment vs. Ally Financial | Flutter Entertainment vs. Universal Health Services | Flutter Entertainment vs. Synchrony Financial |
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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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