Correlation Between BANK MANDIRI and Synchrony Financial
Can any of the company-specific risk be diversified away by investing in both BANK MANDIRI 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 BANK MANDIRI and Synchrony Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BANK MANDIRI and Synchrony Financial, you can compare the effects of market volatilities on BANK MANDIRI 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 BANK MANDIRI with a short position of Synchrony Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of BANK MANDIRI and Synchrony Financial.
Diversification Opportunities for BANK MANDIRI and Synchrony Financial
-0.53 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between BANK and Synchrony is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding BANK MANDIRI and Synchrony Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Synchrony Financial and BANK MANDIRI 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 BANK MANDIRI 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 BANK MANDIRI i.e., BANK MANDIRI and Synchrony Financial go up and down completely randomly.
Pair Corralation between BANK MANDIRI and Synchrony Financial
Assuming the 90 days trading horizon BANK MANDIRI is expected to generate 1.19 times less return on investment than Synchrony Financial. But when comparing it to its historical volatility, BANK MANDIRI is 1.23 times less risky than Synchrony Financial. It trades about 0.25 of its potential returns per unit of risk. Synchrony Financial is currently generating about 0.24 of returns per unit of risk over similar time horizon. If you would invest 6,281 in Synchrony Financial on October 25, 2024 and sell it today you would earn a total of 468.00 from holding Synchrony Financial or generate 7.45% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
BANK MANDIRI vs. Synchrony Financial
Performance |
| Timeline |
| BANK MANDIRI |
| Synchrony Financial |
BANK MANDIRI and Synchrony Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BANK MANDIRI and Synchrony Financial
The main advantage of trading using opposite BANK MANDIRI and Synchrony Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BANK MANDIRI 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.| BANK MANDIRI vs. High Liner Foods | BANK MANDIRI vs. Thai Beverage Public | BANK MANDIRI vs. Columbia Sportswear | BANK MANDIRI vs. PLAYWAY SA ZY 10 |
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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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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