Correlation Between Bank of Ireland and Synchrony Financial
Can any of the company-specific risk be diversified away by investing in both Bank of Ireland 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 Bank of Ireland and Synchrony Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bank of Ireland and Synchrony Financial, you can compare the effects of market volatilities on Bank of Ireland 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 Bank of Ireland with a short position of Synchrony Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of Ireland and Synchrony Financial.
Diversification Opportunities for Bank of Ireland and Synchrony Financial
-0.76 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Bank and Synchrony is -0.76. Overlapping area represents the amount of risk that can be diversified away by holding Bank of Ireland and Synchrony Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Synchrony Financial and Bank of Ireland 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 Bank of Ireland 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 Bank of Ireland i.e., Bank of Ireland and Synchrony Financial go up and down completely randomly.
Pair Corralation between Bank of Ireland and Synchrony Financial
Assuming the 90 days trading horizon Bank of Ireland is expected to generate 7.57 times less return on investment than Synchrony Financial. In addition to that, Bank of Ireland is 1.03 times more volatile than Synchrony Financial. It trades about 0.01 of its total potential returns per unit of risk. Synchrony Financial is currently generating about 0.08 per unit of volatility. If you would invest 3,156 in Synchrony Financial on August 31, 2024 and sell it today you would earn a total of 3,522 from holding Synchrony Financial or generate 111.6% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 96.46% |
| Values | Daily Returns |
Bank of Ireland vs. Synchrony Financial
Performance |
| Timeline |
| Bank of Ireland |
| Synchrony Financial |
Bank of Ireland and Synchrony Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of Ireland and Synchrony Financial
The main advantage of trading using opposite Bank of Ireland and Synchrony Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of Ireland 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.| Bank of Ireland vs. Samsung Electronics Co | Bank of Ireland vs. Samsung Electronics Co | Bank of Ireland vs. Hyundai Motor | Bank of Ireland vs. Toyota Motor Corp |
| Synchrony Financial vs. Neometals | Synchrony Financial vs. Coor Service Management | Synchrony Financial vs. Aeorema Communications Plc | Synchrony Financial vs. JLEN Environmental Assets |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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