Correlation Between GlaxoSmithKline PLC and Synchrony Financial
Can any of the company-specific risk be diversified away by investing in both GlaxoSmithKline PLC 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 GlaxoSmithKline PLC and Synchrony Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between GlaxoSmithKline PLC ADR and Synchrony Financial, you can compare the effects of market volatilities on GlaxoSmithKline PLC 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 GlaxoSmithKline PLC with a short position of Synchrony Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of GlaxoSmithKline PLC and Synchrony Financial.
Diversification Opportunities for GlaxoSmithKline PLC and Synchrony Financial
-0.71 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between GlaxoSmithKline and Synchrony is -0.71. Overlapping area represents the amount of risk that can be diversified away by holding GlaxoSmithKline PLC ADR and Synchrony Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Synchrony Financial and GlaxoSmithKline PLC 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 GlaxoSmithKline PLC ADR 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 GlaxoSmithKline PLC i.e., GlaxoSmithKline PLC and Synchrony Financial go up and down completely randomly.
Pair Corralation between GlaxoSmithKline PLC and Synchrony Financial
Considering the 90-day investment horizon GlaxoSmithKline PLC is expected to generate 2.95 times less return on investment than Synchrony Financial. In addition to that, GlaxoSmithKline PLC is 2.95 times more volatile than Synchrony Financial. It trades about 0.02 of its total potential returns per unit of risk. Synchrony Financial is currently generating about 0.13 per unit of volatility. If you would invest 2,349 in Synchrony Financial on August 31, 2024 and sell it today you would earn a total of 286.00 from holding Synchrony Financial or generate 12.18% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 53.48% |
| Values | Daily Returns |
GlaxoSmithKline PLC ADR vs. Synchrony Financial
Performance |
| Timeline |
| GlaxoSmithKline PLC ADR |
| Synchrony Financial |
GlaxoSmithKline PLC and Synchrony Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GlaxoSmithKline PLC and Synchrony Financial
The main advantage of trading using opposite GlaxoSmithKline PLC and Synchrony Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GlaxoSmithKline PLC 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.| GlaxoSmithKline PLC vs. Novartis AG ADR | GlaxoSmithKline PLC vs. AstraZeneca PLC ADR | GlaxoSmithKline PLC vs. Roche Holding Ltd | GlaxoSmithKline PLC vs. Bristol Myers Squibb |
| Synchrony Financial vs. Synchrony Financial | Synchrony Financial vs. EZCORP Inc | Synchrony Financial vs. FinVolution Group | Synchrony Financial vs. Federal Agricultural Mortgage |
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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
Other Complementary Tools
| Companies Directory Evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals | |
| Portfolio Optimization Compute new portfolio that will generate highest expected return given your specified tolerance for risk | |
| Top Crypto Exchanges Search and analyze digital assets across top global cryptocurrency exchanges | |
| CEOs Directory Screen CEOs from public companies around the world | |
| Idea Analyzer Analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas |