Correlation Between NVIDIA Corp and Synchrony Financial
Can any of the company-specific risk be diversified away by investing in both NVIDIA Corp and Synchrony Financial 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 NVIDIA Corp and Synchrony Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NVIDIA Corp and Synchrony Financial, you can compare the effects of market volatilities on NVIDIA Corp and Synchrony Financial 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 NVIDIA Corp with a short position of Synchrony Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of NVIDIA Corp and Synchrony Financial.
Diversification Opportunities for NVIDIA Corp and Synchrony Financial
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between NVIDIA and Synchrony is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding NVIDIA Corp and Synchrony Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Synchrony Financial and NVIDIA Corp 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 NVIDIA Corp are associated (or correlated) with Synchrony Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Synchrony Financial has no effect on the direction of NVIDIA Corp i.e., NVIDIA Corp and Synchrony Financial go up and down completely randomly.
Pair Corralation between NVIDIA Corp and Synchrony Financial
Assuming the 90 days trading horizon NVIDIA Corp is expected to generate 1.38 times more return on investment than Synchrony Financial. However, NVIDIA Corp is 1.38 times more volatile than Synchrony Financial. It trades about 0.15 of its potential returns per unit of risk. Synchrony Financial is currently generating about 0.16 per unit of risk. If you would invest 4,523 in NVIDIA Corp on September 1, 2024 and sell it today you would earn a total of 9,312 from holding NVIDIA Corp or generate 205.88% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 97.79% |
| Values | Daily Returns |
NVIDIA Corp vs. Synchrony Financial
Performance |
| Timeline |
| NVIDIA Corp |
| Synchrony Financial |
NVIDIA Corp and Synchrony Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NVIDIA Corp and Synchrony Financial
The main advantage of trading using opposite NVIDIA Corp and Synchrony Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NVIDIA Corp position performs unexpectedly, Synchrony Financial 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 Synchrony Financial will offset losses from the drop in Synchrony Financial's long position.| NVIDIA Corp vs. Fidelity National Information | NVIDIA Corp vs. Uber Technologies | NVIDIA Corp vs. Microchip Technology | NVIDIA Corp vs. Celebrus Technologies plc |
| Synchrony Financial vs. Uniper SE | Synchrony Financial vs. Mulberry Group PLC | Synchrony Financial vs. London Security Plc | Synchrony Financial vs. Triad Group 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
Other Complementary Tools
| Bollinger Bands Use Bollinger Bands indicator to analyze target price for a given investing horizon | |
| Idea Optimizer Use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio | |
| Portfolio Analyzer Portfolio analysis module that provides access to portfolio diagnostics and optimization engine | |
| Idea Breakdown Analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes | |
| Watchlist Optimization Optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm |