Correlation Between Synchrony Financial and Toyota
Can any of the company-specific risk be diversified away by investing in both Synchrony Financial and Toyota 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 Toyota into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Synchrony Financial and Toyota Motor Corp, you can compare the effects of market volatilities on Synchrony Financial and Toyota 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 Toyota. Check out your portfolio center. Please also check ongoing floating volatility patterns of Synchrony Financial and Toyota.
Diversification Opportunities for Synchrony Financial and Toyota
0.45 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Synchrony and Toyota is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Synchrony Financial and Toyota Motor Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Toyota Motor Corp 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 Toyota. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Toyota Motor Corp has no effect on the direction of Synchrony Financial i.e., Synchrony Financial and Toyota go up and down completely randomly.
Pair Corralation between Synchrony Financial and Toyota
Assuming the 90 days trading horizon Synchrony Financial is expected to generate 4.46 times more return on investment than Toyota. However, Synchrony Financial is 4.46 times more volatile than Toyota Motor Corp. It trades about 0.21 of its potential returns per unit of risk. Toyota Motor Corp is currently generating about 0.11 per unit of risk. If you would invest 5,476 in Synchrony Financial on August 25, 2024 and sell it today you would earn a total of 1,146 from holding Synchrony Financial or generate 20.93% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Synchrony Financial vs. Toyota Motor Corp
Performance |
| Timeline |
| Synchrony Financial |
| Toyota Motor Corp |
Synchrony Financial and Toyota Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Synchrony Financial and Toyota
The main advantage of trading using opposite Synchrony Financial and Toyota positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Synchrony Financial position performs unexpectedly, Toyota 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 Toyota will offset losses from the drop in Toyota's long position.| Synchrony Financial vs. Infrastrutture Wireless Italiane | Synchrony Financial vs. Air Products Chemicals | Synchrony Financial vs. Seche Environnement SA | Synchrony Financial vs. Zegona Communications Plc |
| Toyota vs. Synchrony Financial | Toyota vs. St Galler Kantonalbank | Toyota vs. Prudential Financial | Toyota vs. Bank of Ireland |
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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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