Correlation Between Old Market and Synchrony Financial
Can any of the company-specific risk be diversified away by investing in both Old Market 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 Old Market and Synchrony Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Old Market Capital and Synchrony Financial, you can compare the effects of market volatilities on Old Market 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 Old Market with a short position of Synchrony Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Old Market and Synchrony Financial.
Diversification Opportunities for Old Market and Synchrony Financial
0.28 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Old and Synchrony is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding Old Market Capital and Synchrony Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Synchrony Financial and Old Market 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 Old Market Capital 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 Old Market i.e., Old Market and Synchrony Financial go up and down completely randomly.
Pair Corralation between Old Market and Synchrony Financial
Given the investment horizon of 90 days Old Market Capital is expected to under-perform the Synchrony Financial. In addition to that, Old Market is 1.41 times more volatile than Synchrony Financial. It trades about -0.09 of its total potential returns per unit of risk. Synchrony Financial is currently generating about 0.04 per unit of volatility. If you would invest 2,040 in Synchrony Financial on August 25, 2024 and sell it today you would earn a total of 18.00 from holding Synchrony Financial or generate 0.88% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Old Market Capital vs. Synchrony Financial
Performance |
| Timeline |
| Old Market Capital |
| Synchrony Financial |
Old Market and Synchrony Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Old Market and Synchrony Financial
The main advantage of trading using opposite Old Market and Synchrony Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Old Market 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.| Old Market vs. Synchrony Financial | Old Market vs. Enova International | Old Market vs. EZCORP Inc | Old Market vs. World Acceptance |
| Synchrony Financial vs. Capital One Financial | Synchrony Financial vs. Capital One Financial | Synchrony Financial vs. Citizens Financial Group | Synchrony Financial vs. Wells Fargo |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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