Correlation Between Biome Technologies and Synchrony Financial
Can any of the company-specific risk be diversified away by investing in both Biome Technologies 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 Biome Technologies and Synchrony Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Biome Technologies Plc and Synchrony Financial, you can compare the effects of market volatilities on Biome Technologies 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 Biome Technologies with a short position of Synchrony Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Biome Technologies and Synchrony Financial.
Diversification Opportunities for Biome Technologies and Synchrony Financial
-0.91 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Biome and Synchrony is -0.91. Overlapping area represents the amount of risk that can be diversified away by holding Biome Technologies Plc and Synchrony Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Synchrony Financial and Biome Technologies 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 Biome Technologies Plc 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 Biome Technologies i.e., Biome Technologies and Synchrony Financial go up and down completely randomly.
Pair Corralation between Biome Technologies and Synchrony Financial
Assuming the 90 days trading horizon Biome Technologies Plc is expected to under-perform the Synchrony Financial. In addition to that, Biome Technologies is 2.85 times more volatile than Synchrony Financial. It trades about -0.3 of its total potential returns per unit of risk. Synchrony Financial is currently generating about 0.07 per unit of volatility. If you would invest 6,583 in Synchrony Financial on September 12, 2024 and sell it today you would earn a total of 113.00 from holding Synchrony Financial or generate 1.72% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Biome Technologies Plc vs. Synchrony Financial
Performance |
| Timeline |
| Biome Technologies Plc |
| Synchrony Financial |
Biome Technologies and Synchrony Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Biome Technologies and Synchrony Financial
The main advantage of trading using opposite Biome Technologies and Synchrony Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Biome Technologies 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.| Biome Technologies vs. Synchrony Financial | Biome Technologies vs. Infrastrutture Wireless Italiane | Biome Technologies vs. Erste Group Bank | Biome Technologies vs. Datalogic |
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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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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