Correlation Between Lindsell Train and Synchrony Financial
Can any of the company-specific risk be diversified away by investing in both Lindsell Train 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 Lindsell Train and Synchrony Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lindsell Train Investment and Synchrony Financial, you can compare the effects of market volatilities on Lindsell Train 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 Lindsell Train with a short position of Synchrony Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lindsell Train and Synchrony Financial.
Diversification Opportunities for Lindsell Train and Synchrony Financial
0.24 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Lindsell and Synchrony is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Lindsell Train Investment and Synchrony Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Synchrony Financial and Lindsell Train 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 Lindsell Train Investment 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 Lindsell Train i.e., Lindsell Train and Synchrony Financial go up and down completely randomly.
Pair Corralation between Lindsell Train and Synchrony Financial
Assuming the 90 days trading horizon Lindsell Train Investment is expected to under-perform the Synchrony Financial. But the stock apears to be less risky and, when comparing its historical volatility, Lindsell Train Investment is 1.52 times less risky than Synchrony Financial. The stock trades about -0.03 of its potential returns per unit of risk. The Synchrony Financial is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 3,524 in Synchrony Financial on October 18, 2024 and sell it today you would earn a total of 3,260 from holding Synchrony Financial or generate 92.51% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 96.38% |
| Values | Daily Returns |
Lindsell Train Investment vs. Synchrony Financial
Performance |
| Timeline |
| Lindsell Train Investment |
| Synchrony Financial |
Lindsell Train and Synchrony Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lindsell Train and Synchrony Financial
The main advantage of trading using opposite Lindsell Train and Synchrony Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lindsell Train 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.| Lindsell Train vs. JB Hunt Transport | Lindsell Train vs. Evolution Gaming Group | Lindsell Train vs. Trainline Plc | Lindsell Train vs. Fresenius Medical Care |
| Synchrony Financial vs. Lindsell Train Investment | Synchrony Financial vs. Herald Investment Trust | Synchrony Financial vs. Caledonia Investments | Synchrony Financial vs. JPMorgan Japanese Investment |
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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