Correlation Between COMMERCIAL VEHICLE and Synchrony Financial
Can any of the company-specific risk be diversified away by investing in both COMMERCIAL VEHICLE 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 COMMERCIAL VEHICLE and Synchrony Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between COMMERCIAL VEHICLE and Synchrony Financial, you can compare the effects of market volatilities on COMMERCIAL VEHICLE 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 COMMERCIAL VEHICLE with a short position of Synchrony Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of COMMERCIAL VEHICLE and Synchrony Financial.
Diversification Opportunities for COMMERCIAL VEHICLE and Synchrony Financial
-0.84 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between COMMERCIAL and Synchrony is -0.84. Overlapping area represents the amount of risk that can be diversified away by holding COMMERCIAL VEHICLE and Synchrony Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Synchrony Financial and COMMERCIAL VEHICLE 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 COMMERCIAL VEHICLE 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 COMMERCIAL VEHICLE i.e., COMMERCIAL VEHICLE and Synchrony Financial go up and down completely randomly.
Pair Corralation between COMMERCIAL VEHICLE and Synchrony Financial
Assuming the 90 days trading horizon COMMERCIAL VEHICLE is expected to under-perform the Synchrony Financial. In addition to that, COMMERCIAL VEHICLE is 1.73 times more volatile than Synchrony Financial. It trades about -0.1 of its total potential returns per unit of risk. Synchrony Financial is currently generating about 0.2 per unit of volatility. If you would invest 6,253 in Synchrony Financial on October 29, 2024 and sell it today you would earn a total of 409.00 from holding Synchrony Financial or generate 6.54% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
COMMERCIAL VEHICLE vs. Synchrony Financial
Performance |
| Timeline |
| COMMERCIAL VEHICLE |
| Synchrony Financial |
COMMERCIAL VEHICLE and Synchrony Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with COMMERCIAL VEHICLE and Synchrony Financial
The main advantage of trading using opposite COMMERCIAL VEHICLE and Synchrony Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if COMMERCIAL VEHICLE 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.| COMMERCIAL VEHICLE vs. Zijin Mining Group | COMMERCIAL VEHICLE vs. Harmony Gold Mining | COMMERCIAL VEHICLE vs. Cardinal Health | COMMERCIAL VEHICLE vs. SERI INDUSTRIAL EO |
| Synchrony Financial vs. Norwegian Air Shuttle | Synchrony Financial vs. ePlay Digital | Synchrony Financial vs. Playtech plc | Synchrony Financial vs. COLUMBIA SPORTSWEAR |
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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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