Correlation Between Litigation Capital and Synchrony Financial
Can any of the company-specific risk be diversified away by investing in both Litigation Capital 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 Litigation Capital and Synchrony Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Litigation Capital Management and Synchrony Financial, you can compare the effects of market volatilities on Litigation Capital 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 Litigation Capital with a short position of Synchrony Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Litigation Capital and Synchrony Financial.
Diversification Opportunities for Litigation Capital and Synchrony Financial
-0.26 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Litigation and Synchrony is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding Litigation Capital Management and Synchrony Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Synchrony Financial and Litigation Capital 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 Litigation Capital Management 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 Litigation Capital i.e., Litigation Capital and Synchrony Financial go up and down completely randomly.
Pair Corralation between Litigation Capital and Synchrony Financial
Assuming the 90 days trading horizon Litigation Capital is expected to generate 1.59 times less return on investment than Synchrony Financial. In addition to that, Litigation Capital is 1.1 times more volatile than Synchrony Financial. It trades about 0.04 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 3,243 in Synchrony Financial on October 14, 2024 and sell it today you would earn a total of 3,194 from holding Synchrony Financial or generate 98.49% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 96.39% |
| Values | Daily Returns |
Litigation Capital Management vs. Synchrony Financial
Performance |
| Timeline |
| Litigation Capital |
| Synchrony Financial |
Litigation Capital and Synchrony Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Litigation Capital and Synchrony Financial
The main advantage of trading using opposite Litigation Capital and Synchrony Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Litigation Capital 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.| Litigation Capital vs. Bellevue Healthcare Trust | Litigation Capital vs. Erste Group Bank | Litigation Capital vs. St Galler Kantonalbank | Litigation Capital vs. Ameriprise Financial |
| Synchrony Financial vs. Bankers Investment Trust | Synchrony Financial vs. Herald Investment Trust | Synchrony Financial vs. Seraphim Space Investment | Synchrony Financial vs. Litigation Capital Management |
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 Stocks Directory module to find actively traded stocks across global markets.
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