Correlation Between MT Bank and Synovus Financial

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Can any of the company-specific risk be diversified away by investing in both MT Bank and Synovus 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 MT Bank and Synovus Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between MT Bank and Synovus Financial Corp, you can compare the effects of market volatilities on MT Bank and Synovus 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 MT Bank with a short position of Synovus Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of MT Bank and Synovus Financial.

Diversification Opportunities for MT Bank and Synovus Financial

0.8
  Correlation Coefficient

Very poor diversification

The 3 months correlation between MTB and Synovus is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding MT Bank and Synovus Financial Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Synovus Financial Corp and MT Bank 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 MT Bank are associated (or correlated) with Synovus Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Synovus Financial Corp has no effect on the direction of MT Bank i.e., MT Bank and Synovus Financial go up and down completely randomly.

Pair Corralation between MT Bank and Synovus Financial

Considering the 90-day investment horizon MT Bank is expected to generate 0.67 times more return on investment than Synovus Financial. However, MT Bank is 1.5 times less risky than Synovus Financial. It trades about -0.23 of its potential returns per unit of risk. Synovus Financial Corp is currently generating about -0.19 per unit of risk. If you would invest  20,104  in MT Bank on November 28, 2024 and sell it today you would lose (1,043) from holding MT Bank or give up 5.19% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthStrong
Accuracy100.0%
ValuesDaily Returns

MT Bank  vs.  Synovus Financial Corp

 Performance 
       Timeline  
MT Bank 

Risk-Adjusted Performance

Very Weak

 
Weak
 
Strong
Over the last 90 days MT Bank has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in March 2025. The current disturbance may also be a sign of long term up-swing for the company investors.
Synovus Financial Corp 

Risk-Adjusted Performance

Very Weak

 
Weak
 
Strong
Over the last 90 days Synovus Financial Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Stock's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

MT Bank and Synovus Financial Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with MT Bank and Synovus Financial

The main advantage of trading using opposite MT Bank and Synovus Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MT Bank position performs unexpectedly, Synovus 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 Synovus Financial will offset losses from the drop in Synovus Financial's long position.
The idea behind MT Bank and Synovus Financial Corp pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.

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