Correlation Between Synchrony Financial and Brother Industries
Can any of the company-specific risk be diversified away by investing in both Synchrony Financial and Brother Industries 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 Brother Industries into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Synchrony Financial and Brother Industries, you can compare the effects of market volatilities on Synchrony Financial and Brother Industries 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 Brother Industries. Check out your portfolio center. Please also check ongoing floating volatility patterns of Synchrony Financial and Brother Industries.
Diversification Opportunities for Synchrony Financial and Brother Industries
-0.72 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Synchrony and Brother is -0.72. Overlapping area represents the amount of risk that can be diversified away by holding Synchrony Financial and Brother Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Brother Industries 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 Brother Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Brother Industries has no effect on the direction of Synchrony Financial i.e., Synchrony Financial and Brother Industries go up and down completely randomly.
Pair Corralation between Synchrony Financial and Brother Industries
Assuming the 90 days horizon Synchrony Financial is expected to generate 1.1 times more return on investment than Brother Industries. However, Synchrony Financial is 1.1 times more volatile than Brother Industries. It trades about 0.14 of its potential returns per unit of risk. Brother Industries is currently generating about 0.07 per unit of risk. If you would invest 6,298 in Synchrony Financial on November 4, 2024 and sell it today you would earn a total of 334.00 from holding Synchrony Financial or generate 5.3% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Synchrony Financial vs. Brother Industries
Performance |
| Timeline |
| Synchrony Financial |
| Brother Industries |
Synchrony Financial and Brother Industries Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Synchrony Financial and Brother Industries
The main advantage of trading using opposite Synchrony Financial and Brother Industries positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Synchrony Financial position performs unexpectedly, Brother Industries 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 Brother Industries will offset losses from the drop in Brother Industries' long position.| Synchrony Financial vs. SCANSOURCE | Synchrony Financial vs. Sixt Leasing SE | Synchrony Financial vs. MOVIE GAMES SA | Synchrony Financial vs. GigaMedia |
| Brother Industries vs. Canon Inc | Brother Industries vs. Canon Inc | Brother Industries vs. Ricoh Company | Brother Industries vs. Canon Marketing Japan |
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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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