Correlation Between Synchrony Financial and Bread Financial
Can any of the company-specific risk be diversified away by investing in both Synchrony Financial and Bread 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 Synchrony Financial and Bread Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Synchrony Financial and Bread Financial Holdings, you can compare the effects of market volatilities on Synchrony Financial and Bread 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 Synchrony Financial with a short position of Bread Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Synchrony Financial and Bread Financial.
Diversification Opportunities for Synchrony Financial and Bread Financial
0.93 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Synchrony and Bread is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Synchrony Financial and Bread Financial Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bread Financial Holdings and Synchrony Financial 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 Synchrony Financial are associated (or correlated) with Bread Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bread Financial Holdings has no effect on the direction of Synchrony Financial i.e., Synchrony Financial and Bread Financial go up and down completely randomly.
Pair Corralation between Synchrony Financial and Bread Financial
Assuming the 90 days trading horizon Synchrony Financial is expected to generate 0.96 times more return on investment than Bread Financial. However, Synchrony Financial is 1.04 times less risky than Bread Financial. It trades about -0.05 of its potential returns per unit of risk. Bread Financial Holdings is currently generating about -0.32 per unit of risk. If you would invest 40,649 in Synchrony Financial on October 12, 2024 and sell it today you would lose (519.00) from holding Synchrony Financial or give up 1.28% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Synchrony Financial vs. Bread Financial Holdings
Performance |
| Timeline |
| Synchrony Financial |
| Bread Financial Holdings |
Synchrony Financial and Bread Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Synchrony Financial and Bread Financial
The main advantage of trading using opposite Synchrony Financial and Bread Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Synchrony Financial position performs unexpectedly, Bread 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 Bread Financial will offset losses from the drop in Bread Financial's long position.| Synchrony Financial vs. Hormel Foods | Synchrony Financial vs. Clover Health Investments, | Synchrony Financial vs. Unifique Telecomunicaes SA | Synchrony Financial vs. Ares Management |
| Bread Financial vs. Capital One Financial | Bread Financial vs. Bank of America | Bread Financial vs. Synchrony Financial | Bread Financial vs. Truist Financial |
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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
Other Complementary Tools
| Odds Of Bankruptcy Get analysis of equity chance of financial distress in the next 2 years | |
| Analyst Advice Analyst recommendations and target price estimates broken down by several categories | |
| CEOs Directory Screen CEOs from public companies around the world | |
| Competition Analyzer Analyze and compare many basic indicators for a group of related or unrelated entities | |
| Funds Screener Find actively-traded funds from around the world traded on over 30 global exchanges |