Correlation Between Synchrony Financial and Taylor Morrison
Can any of the company-specific risk be diversified away by investing in both Synchrony Financial and Taylor Morrison 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 Taylor Morrison into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Synchrony Financial and Taylor Morrison Home, you can compare the effects of market volatilities on Synchrony Financial and Taylor Morrison 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 Taylor Morrison. Check out your portfolio center. Please also check ongoing floating volatility patterns of Synchrony Financial and Taylor Morrison.
Diversification Opportunities for Synchrony Financial and Taylor Morrison
0.15 | Correlation Coefficient |
Average diversification
The 3 months correlation between Synchrony and Taylor is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Synchrony Financial and Taylor Morrison Home in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Taylor Morrison Home 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 Taylor Morrison. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Taylor Morrison Home has no effect on the direction of Synchrony Financial i.e., Synchrony Financial and Taylor Morrison go up and down completely randomly.
Pair Corralation between Synchrony Financial and Taylor Morrison
Assuming the 90 days horizon Synchrony Financial is expected to generate 0.8 times more return on investment than Taylor Morrison. However, Synchrony Financial is 1.24 times less risky than Taylor Morrison. It trades about -0.07 of its potential returns per unit of risk. Taylor Morrison Home is currently generating about -0.24 per unit of risk. If you would invest 6,538 in Synchrony Financial on October 13, 2024 and sell it today you would lose (136.00) from holding Synchrony Financial or give up 2.08% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Synchrony Financial vs. Taylor Morrison Home
Performance |
| Timeline |
| Synchrony Financial |
| Taylor Morrison Home |
Synchrony Financial and Taylor Morrison Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Synchrony Financial and Taylor Morrison
The main advantage of trading using opposite Synchrony Financial and Taylor Morrison positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Synchrony Financial position performs unexpectedly, Taylor Morrison 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 Taylor Morrison will offset losses from the drop in Taylor Morrison's long position.| Synchrony Financial vs. Visa Inc | Synchrony Financial vs. Discover Financial Services | Synchrony Financial vs. Superior Plus Corp | Synchrony Financial vs. NMI Holdings |
| Taylor Morrison vs. Erste Group Bank | Taylor Morrison vs. Synchrony Financial | Taylor Morrison vs. IMPERIAL TOBACCO | Taylor Morrison vs. Sun Life Financial |
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 Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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