Correlation Between Synchrony Financial and CPU SOFTWAREHOUSE
Can any of the company-specific risk be diversified away by investing in both Synchrony Financial and CPU SOFTWAREHOUSE 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 CPU SOFTWAREHOUSE into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Synchrony Financial and CPU SOFTWAREHOUSE, you can compare the effects of market volatilities on Synchrony Financial and CPU SOFTWAREHOUSE 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 CPU SOFTWAREHOUSE. Check out your portfolio center. Please also check ongoing floating volatility patterns of Synchrony Financial and CPU SOFTWAREHOUSE.
Diversification Opportunities for Synchrony Financial and CPU SOFTWAREHOUSE
-0.36 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Synchrony and CPU is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Synchrony Financial and CPU SOFTWAREHOUSE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CPU SOFTWAREHOUSE 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 CPU SOFTWAREHOUSE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CPU SOFTWAREHOUSE has no effect on the direction of Synchrony Financial i.e., Synchrony Financial and CPU SOFTWAREHOUSE go up and down completely randomly.
Pair Corralation between Synchrony Financial and CPU SOFTWAREHOUSE
Assuming the 90 days horizon Synchrony Financial is expected to under-perform the CPU SOFTWAREHOUSE. But the stock apears to be less risky and, when comparing its historical volatility, Synchrony Financial is 4.14 times less risky than CPU SOFTWAREHOUSE. The stock trades about -0.03 of its potential returns per unit of risk. The CPU SOFTWAREHOUSE is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest 89.00 in CPU SOFTWAREHOUSE on October 12, 2024 and sell it today you would earn a total of 18.00 from holding CPU SOFTWAREHOUSE or generate 20.22% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Synchrony Financial vs. CPU SOFTWAREHOUSE
Performance |
| Timeline |
| Synchrony Financial |
| CPU SOFTWAREHOUSE |
Synchrony Financial and CPU SOFTWAREHOUSE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Synchrony Financial and CPU SOFTWAREHOUSE
The main advantage of trading using opposite Synchrony Financial and CPU SOFTWAREHOUSE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Synchrony Financial position performs unexpectedly, CPU SOFTWAREHOUSE 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 CPU SOFTWAREHOUSE will offset losses from the drop in CPU SOFTWAREHOUSE's long position.| Synchrony Financial vs. CPU SOFTWAREHOUSE | Synchrony Financial vs. GBS Software AG | Synchrony Financial vs. Alfa Financial Software | Synchrony Financial vs. Kingdee International Software |
| CPU SOFTWAREHOUSE vs. BG Foods | CPU SOFTWAREHOUSE vs. EMPEROR ENT HOTEL | CPU SOFTWAREHOUSE vs. EBRO FOODS | CPU SOFTWAREHOUSE vs. Dalata Hotel Group |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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