Correlation Between Synchrony Financial and MELIA HOTELS
Can any of the company-specific risk be diversified away by investing in both Synchrony Financial and MELIA HOTELS 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 MELIA HOTELS into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Synchrony Financial and MELIA HOTELS, you can compare the effects of market volatilities on Synchrony Financial and MELIA HOTELS 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 MELIA HOTELS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Synchrony Financial and MELIA HOTELS.
Diversification Opportunities for Synchrony Financial and MELIA HOTELS
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Synchrony and MELIA is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Synchrony Financial and MELIA HOTELS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MELIA HOTELS 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 MELIA HOTELS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MELIA HOTELS has no effect on the direction of Synchrony Financial i.e., Synchrony Financial and MELIA HOTELS go up and down completely randomly.
Pair Corralation between Synchrony Financial and MELIA HOTELS
Assuming the 90 days horizon Synchrony Financial is expected to generate 1.11 times less return on investment than MELIA HOTELS. In addition to that, Synchrony Financial is 1.19 times more volatile than MELIA HOTELS. It trades about 0.01 of its total potential returns per unit of risk. MELIA HOTELS is currently generating about 0.02 per unit of volatility. If you would invest 714.00 in MELIA HOTELS on October 10, 2024 and sell it today you would earn a total of 2.00 from holding MELIA HOTELS or generate 0.28% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Synchrony Financial vs. MELIA HOTELS
Performance |
| Timeline |
| Synchrony Financial |
| MELIA HOTELS |
Synchrony Financial and MELIA HOTELS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Synchrony Financial and MELIA HOTELS
The main advantage of trading using opposite Synchrony Financial and MELIA HOTELS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Synchrony Financial position performs unexpectedly, MELIA HOTELS 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 MELIA HOTELS will offset losses from the drop in MELIA HOTELS's long position.| Synchrony Financial vs. Hollywood Bowl Group | Synchrony Financial vs. CNVISION MEDIA | Synchrony Financial vs. PROSIEBENSAT1 MEDIADR4 | Synchrony Financial vs. Focus Home Interactive |
| MELIA HOTELS vs. Air Transport Services | MELIA HOTELS vs. Sunstone Hotel Investors | MELIA HOTELS vs. Choice Hotels International | MELIA HOTELS vs. JD SPORTS FASH |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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