Correlation Between Synchrony Financial and Strategic Education
Can any of the company-specific risk be diversified away by investing in both Synchrony Financial and Strategic Education 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 Strategic Education into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Synchrony Financial and Strategic Education, you can compare the effects of market volatilities on Synchrony Financial and Strategic Education 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 Strategic Education. Check out your portfolio center. Please also check ongoing floating volatility patterns of Synchrony Financial and Strategic Education.
Diversification Opportunities for Synchrony Financial and Strategic Education
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Synchrony and Strategic is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Synchrony Financial and Strategic Education in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Strategic Education 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 Strategic Education. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Strategic Education has no effect on the direction of Synchrony Financial i.e., Synchrony Financial and Strategic Education go up and down completely randomly.
Pair Corralation between Synchrony Financial and Strategic Education
Assuming the 90 days horizon Synchrony Financial is expected to generate 1.15 times more return on investment than Strategic Education. However, Synchrony Financial is 1.15 times more volatile than Strategic Education. It trades about 0.16 of its potential returns per unit of risk. Strategic Education is currently generating about 0.06 per unit of risk. If you would invest 4,202 in Synchrony Financial on November 7, 2024 and sell it today you would earn a total of 2,128 from holding Synchrony Financial or generate 50.64% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Synchrony Financial vs. Strategic Education
Performance |
| Timeline |
| Synchrony Financial |
| Strategic Education |
Synchrony Financial and Strategic Education Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Synchrony Financial and Strategic Education
The main advantage of trading using opposite Synchrony Financial and Strategic Education positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Synchrony Financial position performs unexpectedly, Strategic Education 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 Strategic Education will offset losses from the drop in Strategic Education's long position.| Synchrony Financial vs. Warner Music Group | Synchrony Financial vs. UNIVMUSIC GRPADR050 | Synchrony Financial vs. HK Electric Investments | Synchrony Financial vs. MidCap Financial Investment |
| Strategic Education vs. MACOM Technology Solutions | Strategic Education vs. Commercial Vehicle Group | Strategic Education vs. Kingdee International Software | Strategic Education vs. GEELY AUTOMOBILE |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
Other Complementary Tools
| Stocks Directory Find actively traded stocks across global markets | |
| Idea Analyzer Analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas | |
| Watchlist Optimization Optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm | |
| Portfolio Rebalancing Analyze risk-adjusted returns against different time horizons to find asset-allocation targets | |
| Share Portfolio Track or share privately all of your investments from the convenience of any device |