Correlation Between Synchrony Financial and Telefonaktiebolaget
Can any of the company-specific risk be diversified away by investing in both Synchrony Financial and Telefonaktiebolaget 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 Telefonaktiebolaget into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Synchrony Financial and Telefonaktiebolaget LM Ericsson, you can compare the effects of market volatilities on Synchrony Financial and Telefonaktiebolaget 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 Telefonaktiebolaget. Check out your portfolio center. Please also check ongoing floating volatility patterns of Synchrony Financial and Telefonaktiebolaget.
Diversification Opportunities for Synchrony Financial and Telefonaktiebolaget
0.18 | Correlation Coefficient |
Average diversification
The 3 months correlation between Synchrony and Telefonaktiebolaget is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding Synchrony Financial and Telefonaktiebolaget LM Ericsso in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Telefonaktiebolaget 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 Telefonaktiebolaget. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Telefonaktiebolaget has no effect on the direction of Synchrony Financial i.e., Synchrony Financial and Telefonaktiebolaget go up and down completely randomly.
Pair Corralation between Synchrony Financial and Telefonaktiebolaget
Assuming the 90 days horizon Synchrony Financial is expected to generate 0.48 times more return on investment than Telefonaktiebolaget. However, Synchrony Financial is 2.09 times less risky than Telefonaktiebolaget. It trades about 0.03 of its potential returns per unit of risk. Telefonaktiebolaget LM Ericsson is currently generating about -0.13 per unit of risk. If you would invest 6,481 in Synchrony Financial on November 6, 2024 and sell it today you would earn a total of 62.00 from holding Synchrony Financial or generate 0.96% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Synchrony Financial vs. Telefonaktiebolaget LM Ericsso
Performance |
| Timeline |
| Synchrony Financial |
| Telefonaktiebolaget |
Synchrony Financial and Telefonaktiebolaget Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Synchrony Financial and Telefonaktiebolaget
The main advantage of trading using opposite Synchrony Financial and Telefonaktiebolaget positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Synchrony Financial position performs unexpectedly, Telefonaktiebolaget 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 Telefonaktiebolaget will offset losses from the drop in Telefonaktiebolaget's long position.| Synchrony Financial vs. SOUTHWEST AIRLINES | Synchrony Financial vs. COLUMBIA SPORTSWEAR | Synchrony Financial vs. Cars Inc | Synchrony Financial vs. Geely Automobile Holdings |
| Telefonaktiebolaget vs. COLUMBIA SPORTSWEAR | Telefonaktiebolaget vs. GALENA MINING LTD | Telefonaktiebolaget vs. SCIENCE IN SPORT | Telefonaktiebolaget vs. Perseus Mining Limited |
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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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