Correlation Between Hyundai and Synchrony Financial
Can any of the company-specific risk be diversified away by investing in both Hyundai 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 Hyundai and Synchrony Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hyundai Motor and Synchrony Financial, you can compare the effects of market volatilities on Hyundai 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 Hyundai with a short position of Synchrony Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hyundai and Synchrony Financial.
Diversification Opportunities for Hyundai and Synchrony Financial
-0.85 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Hyundai and Synchrony is -0.85. Overlapping area represents the amount of risk that can be diversified away by holding Hyundai Motor and Synchrony Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Synchrony Financial and Hyundai 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 Hyundai Motor 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 Hyundai i.e., Hyundai and Synchrony Financial go up and down completely randomly.
Pair Corralation between Hyundai and Synchrony Financial
Assuming the 90 days trading horizon Hyundai is expected to generate 1.53 times less return on investment than Synchrony Financial. In addition to that, Hyundai is 1.07 times more volatile than Synchrony Financial. It trades about 0.06 of its total potential returns per unit of risk. Synchrony Financial is currently generating about 0.1 per unit of volatility. If you would invest 3,240 in Synchrony Financial on August 31, 2024 and sell it today you would earn a total of 3,438 from holding Synchrony Financial or generate 106.11% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 96.83% |
| Values | Daily Returns |
Hyundai Motor vs. Synchrony Financial
Performance |
| Timeline |
| Hyundai Motor |
| Synchrony Financial |
Hyundai and Synchrony Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hyundai and Synchrony Financial
The main advantage of trading using opposite Hyundai and Synchrony Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hyundai 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.| Hyundai vs. Empire Metals Limited | Hyundai vs. Vienna Insurance Group | Hyundai vs. Ecclesiastical Insurance Office | Hyundai vs. Adriatic Metals |
| 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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