Correlation Between Argo Group and Synchrony Financial
Can any of the company-specific risk be diversified away by investing in both Argo Group 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 Argo Group and Synchrony Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Argo Group Limited and Synchrony Financial, you can compare the effects of market volatilities on Argo Group 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 Argo Group with a short position of Synchrony Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Argo Group and Synchrony Financial.
Diversification Opportunities for Argo Group and Synchrony Financial
-0.46 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Argo and Synchrony is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding Argo Group Limited and Synchrony Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Synchrony Financial and Argo Group 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 Argo Group Limited 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 Argo Group i.e., Argo Group and Synchrony Financial go up and down completely randomly.
Pair Corralation between Argo Group and Synchrony Financial
Assuming the 90 days trading horizon Argo Group is expected to generate 46.71 times less return on investment than Synchrony Financial. But when comparing it to its historical volatility, Argo Group Limited is 2.15 times less risky than Synchrony Financial. It trades about 0.01 of its potential returns per unit of risk. Synchrony Financial is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest 5,555 in Synchrony Financial on August 30, 2024 and sell it today you would earn a total of 1,123 from holding Synchrony Financial or generate 20.22% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Argo Group Limited vs. Synchrony Financial
Performance |
| Timeline |
| Argo Group Limited |
| Synchrony Financial |
Argo Group and Synchrony Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Argo Group and Synchrony Financial
The main advantage of trading using opposite Argo Group and Synchrony Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Argo Group 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.| Argo Group vs. Optima Health plc | Argo Group vs. Spire Healthcare Group | Argo Group vs. Universal Music Group | Argo Group vs. Naturhouse Health SA |
| Synchrony Financial vs. Tungsten West PLC | Synchrony Financial vs. Argo Group Limited | Synchrony Financial vs. Hardide PLC | Synchrony Financial vs. Versarien 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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