Correlation Between Sherborne Investors and Synchrony Financial
Can any of the company-specific risk be diversified away by investing in both Sherborne Investors and Synchrony Financial 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 Sherborne Investors and Synchrony Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sherborne Investors Guernsey and Synchrony Financial, you can compare the effects of market volatilities on Sherborne Investors and Synchrony Financial 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 Sherborne Investors with a short position of Synchrony Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sherborne Investors and Synchrony Financial.
Diversification Opportunities for Sherborne Investors and Synchrony Financial
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Sherborne and Synchrony is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Sherborne Investors Guernsey and Synchrony Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Synchrony Financial and Sherborne Investors 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 Sherborne Investors Guernsey are associated (or correlated) with Synchrony Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Synchrony Financial has no effect on the direction of Sherborne Investors i.e., Sherborne Investors and Synchrony Financial go up and down completely randomly.
Pair Corralation between Sherborne Investors and Synchrony Financial
Assuming the 90 days trading horizon Sherborne Investors is expected to generate 5.18 times less return on investment than Synchrony Financial. But when comparing it to its historical volatility, Sherborne Investors Guernsey is 4.45 times less risky than Synchrony Financial. It trades about 0.16 of its potential returns per unit of risk. Synchrony Financial is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest 5,652 in Synchrony Financial on August 29, 2024 and sell it today you would earn a total of 1,034 from holding Synchrony Financial or generate 18.29% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sherborne Investors Guernsey vs. Synchrony Financial
Performance |
| Timeline |
| Sherborne Investors |
| Synchrony Financial |
Sherborne Investors and Synchrony Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sherborne Investors and Synchrony Financial
The main advantage of trading using opposite Sherborne Investors and Synchrony Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sherborne Investors position performs unexpectedly, Synchrony Financial 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 Synchrony Financial will offset losses from the drop in Synchrony Financial's long position.| Sherborne Investors vs. Check Point Software | Sherborne Investors vs. PureTech Health plc | Sherborne Investors vs. Park Hotels Resorts | Sherborne Investors vs. Alfa Financial Software |
| Synchrony Financial vs. Lendinvest PLC | Synchrony Financial vs. Neometals | Synchrony Financial vs. Coor Service Management | Synchrony Financial vs. Albion Technology General |
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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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