Correlation Between Federal Agricultural and Synchrony Financial
Can any of the company-specific risk be diversified away by investing in both Federal Agricultural 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 Federal Agricultural and Synchrony Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Federal Agricultural Mortgage and Synchrony Financial, you can compare the effects of market volatilities on Federal Agricultural 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 Federal Agricultural with a short position of Synchrony Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Federal Agricultural and Synchrony Financial.
Diversification Opportunities for Federal Agricultural and Synchrony Financial
0.37 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Federal and Synchrony is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Federal Agricultural Mortgage and Synchrony Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Synchrony Financial and Federal Agricultural 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 Federal Agricultural Mortgage 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 Federal Agricultural i.e., Federal Agricultural and Synchrony Financial go up and down completely randomly.
Pair Corralation between Federal Agricultural and Synchrony Financial
Assuming the 90 days trading horizon Federal Agricultural Mortgage is expected to generate 0.48 times more return on investment than Synchrony Financial. However, Federal Agricultural Mortgage is 2.07 times less risky than Synchrony Financial. It trades about -0.14 of its potential returns per unit of risk. Synchrony Financial is currently generating about -0.1 per unit of risk. If you would invest 2,354 in Federal Agricultural Mortgage on September 13, 2024 and sell it today you would lose (41.00) from holding Federal Agricultural Mortgage or give up 1.74% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Federal Agricultural Mortgage vs. Synchrony Financial
Performance |
| Timeline |
| Federal Agricultural |
| Synchrony Financial |
Federal Agricultural and Synchrony Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Federal Agricultural and Synchrony Financial
The main advantage of trading using opposite Federal Agricultural and Synchrony Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Federal Agricultural 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.| Federal Agricultural vs. Federal Agricultural Mortgage | Federal Agricultural vs. Federal Agricultural Mortgage | Federal Agricultural vs. Federal Agricultural Mortgage | Federal Agricultural vs. The Allstate |
| Synchrony Financial vs. Babcock Wilcox Enterprises | Synchrony Financial vs. XOMA Corporation | Synchrony Financial vs. Brighthouse Financial | Synchrony Financial vs. Presidio Property Trust |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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