Correlation Between Synchrony Financial and Automatic Data
Can any of the company-specific risk be diversified away by investing in both Synchrony Financial and Automatic Data 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 Automatic Data into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Synchrony Financial and Automatic Data Processing, you can compare the effects of market volatilities on Synchrony Financial and Automatic Data 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 Automatic Data. Check out your portfolio center. Please also check ongoing floating volatility patterns of Synchrony Financial and Automatic Data.
Diversification Opportunities for Synchrony Financial and Automatic Data
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Synchrony and Automatic is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Synchrony Financial and Automatic Data Processing in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Automatic Data Processing 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 Automatic Data. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Automatic Data Processing has no effect on the direction of Synchrony Financial i.e., Synchrony Financial and Automatic Data go up and down completely randomly.
Pair Corralation between Synchrony Financial and Automatic Data
Assuming the 90 days trading horizon Synchrony Financial is expected to generate 1.57 times more return on investment than Automatic Data. However, Synchrony Financial is 1.57 times more volatile than Automatic Data Processing. It trades about 0.05 of its potential returns per unit of risk. Automatic Data Processing is currently generating about -0.05 per unit of risk. If you would invest 40,146 in Synchrony Financial on November 4, 2024 and sell it today you would earn a total of 628.00 from holding Synchrony Financial or generate 1.56% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Synchrony Financial vs. Automatic Data Processing
Performance |
| Timeline |
| Synchrony Financial |
| Automatic Data Processing |
Synchrony Financial and Automatic Data Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Synchrony Financial and Automatic Data
The main advantage of trading using opposite Synchrony Financial and Automatic Data positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Synchrony Financial position performs unexpectedly, Automatic Data 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 Automatic Data will offset losses from the drop in Automatic Data's long position.| Synchrony Financial vs. Cardinal Health, | Synchrony Financial vs. NXP Semiconductors NV | Synchrony Financial vs. Teladoc Health | Synchrony Financial vs. Charter Communications |
| Automatic Data vs. Verizon Communications | Automatic Data vs. Clover Health Investments, | Automatic Data vs. Fidelity National Information | Automatic Data vs. Microchip Technology Incorporated |
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 Stocks Directory module to find actively traded stocks across global markets.
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