Correlation Between Synchrony Financial and NORTHEAST UTILITIES
Can any of the company-specific risk be diversified away by investing in both Synchrony Financial and NORTHEAST UTILITIES 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 NORTHEAST UTILITIES into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Synchrony Financial and NORTHEAST UTILITIES, you can compare the effects of market volatilities on Synchrony Financial and NORTHEAST UTILITIES 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 NORTHEAST UTILITIES. Check out your portfolio center. Please also check ongoing floating volatility patterns of Synchrony Financial and NORTHEAST UTILITIES.
Diversification Opportunities for Synchrony Financial and NORTHEAST UTILITIES
-0.24 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Synchrony and NORTHEAST is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding Synchrony Financial and NORTHEAST UTILITIES in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NORTHEAST UTILITIES 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 NORTHEAST UTILITIES. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NORTHEAST UTILITIES has no effect on the direction of Synchrony Financial i.e., Synchrony Financial and NORTHEAST UTILITIES go up and down completely randomly.
Pair Corralation between Synchrony Financial and NORTHEAST UTILITIES
Assuming the 90 days horizon Synchrony Financial is expected to generate 1.61 times less return on investment than NORTHEAST UTILITIES. In addition to that, Synchrony Financial is 1.11 times more volatile than NORTHEAST UTILITIES. It trades about 0.06 of its total potential returns per unit of risk. NORTHEAST UTILITIES is currently generating about 0.11 per unit of volatility. If you would invest 5,400 in NORTHEAST UTILITIES on November 7, 2024 and sell it today you would earn a total of 200.00 from holding NORTHEAST UTILITIES or generate 3.7% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 91.3% |
| Values | Daily Returns |
Synchrony Financial vs. NORTHEAST UTILITIES
Performance |
| Timeline |
| Synchrony Financial |
| NORTHEAST UTILITIES |
Synchrony Financial and NORTHEAST UTILITIES Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Synchrony Financial and NORTHEAST UTILITIES
The main advantage of trading using opposite Synchrony Financial and NORTHEAST UTILITIES positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Synchrony Financial position performs unexpectedly, NORTHEAST UTILITIES 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 NORTHEAST UTILITIES will offset losses from the drop in NORTHEAST UTILITIES's long position.| Synchrony Financial vs. CAL MAINE FOODS | Synchrony Financial vs. MeVis Medical Solutions | Synchrony Financial vs. US FOODS HOLDING | Synchrony Financial vs. Peijia Medical Limited |
| NORTHEAST UTILITIES vs. CORNISH METALS INC | NORTHEAST UTILITIES vs. MCEWEN MINING INC | NORTHEAST UTILITIES vs. Monster Beverage Corp | NORTHEAST UTILITIES vs. SAN MIGUEL BREWERY |
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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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