Correlation Between UNIVMUSIC GRPADR/050 and Synchrony Financial
Can any of the company-specific risk be diversified away by investing in both UNIVMUSIC GRPADR/050 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 UNIVMUSIC GRPADR/050 and Synchrony Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between UNIVMUSIC GRPADR050 and Synchrony Financial, you can compare the effects of market volatilities on UNIVMUSIC GRPADR/050 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 UNIVMUSIC GRPADR/050 with a short position of Synchrony Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of UNIVMUSIC GRPADR/050 and Synchrony Financial.
Diversification Opportunities for UNIVMUSIC GRPADR/050 and Synchrony Financial
0.04 | Correlation Coefficient |
Significant diversification
The 3 months correlation between UNIVMUSIC and Synchrony is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding UNIVMUSIC GRPADR050 and Synchrony Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Synchrony Financial and UNIVMUSIC GRPADR/050 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 UNIVMUSIC GRPADR050 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 UNIVMUSIC GRPADR/050 i.e., UNIVMUSIC GRPADR/050 and Synchrony Financial go up and down completely randomly.
Pair Corralation between UNIVMUSIC GRPADR/050 and Synchrony Financial
Assuming the 90 days trading horizon UNIVMUSIC GRPADR/050 is expected to generate 4.23 times less return on investment than Synchrony Financial. But when comparing it to its historical volatility, UNIVMUSIC GRPADR050 is 1.17 times less risky than Synchrony Financial. It trades about 0.02 of its potential returns per unit of risk. Synchrony Financial is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 3,053 in Synchrony Financial on October 15, 2024 and sell it today you would earn a total of 3,169 from holding Synchrony Financial or generate 103.8% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
UNIVMUSIC GRPADR050 vs. Synchrony Financial
Performance |
| Timeline |
| UNIVMUSIC GRPADR/050 |
| Synchrony Financial |
UNIVMUSIC GRPADR/050 and Synchrony Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with UNIVMUSIC GRPADR/050 and Synchrony Financial
The main advantage of trading using opposite UNIVMUSIC GRPADR/050 and Synchrony Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if UNIVMUSIC GRPADR/050 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.| UNIVMUSIC GRPADR/050 vs. Columbia Sportswear | UNIVMUSIC GRPADR/050 vs. Agilent Technologies | UNIVMUSIC GRPADR/050 vs. SOFI TECHNOLOGIES | UNIVMUSIC GRPADR/050 vs. PLAYWAY SA ZY 10 |
| Synchrony Financial vs. Bio Techne Corp | Synchrony Financial vs. Xiwang Special Steel | Synchrony Financial vs. Easy Software AG | Synchrony Financial vs. ACCSYS TECHPLC EO |
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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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