Correlation Between Synovus Financial and US Bancorp
Can any of the company-specific risk be diversified away by investing in both Synovus Financial and US Bancorp 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 Synovus Financial and US Bancorp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Synovus Financial Corp and US Bancorp PERP, you can compare the effects of market volatilities on Synovus Financial and US Bancorp 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 Synovus Financial with a short position of US Bancorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Synovus Financial and US Bancorp.
Diversification Opportunities for Synovus Financial and US Bancorp
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Synovus and USB-PA is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Synovus Financial Corp and US Bancorp PERP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on US Bancorp PERP and Synovus 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 Synovus Financial Corp are associated (or correlated) with US Bancorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of US Bancorp PERP has no effect on the direction of Synovus Financial i.e., Synovus Financial and US Bancorp go up and down completely randomly.
Pair Corralation between Synovus Financial and US Bancorp
Assuming the 90 days trading horizon Synovus Financial Corp is expected to generate 1.39 times more return on investment than US Bancorp. However, Synovus Financial is 1.39 times more volatile than US Bancorp PERP. It trades about 0.04 of its potential returns per unit of risk. US Bancorp PERP is currently generating about 0.06 per unit of risk. If you would invest 2,004 in Synovus Financial Corp on August 30, 2024 and sell it today you would earn a total of 546.00 from holding Synovus Financial Corp or generate 27.25% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Synovus Financial Corp vs. US Bancorp PERP
Performance |
| Timeline |
| Synovus Financial Corp |
| US Bancorp PERP |
Synovus Financial and US Bancorp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Synovus Financial and US Bancorp
The main advantage of trading using opposite Synovus Financial and US Bancorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Synovus Financial position performs unexpectedly, US Bancorp 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 US Bancorp will offset losses from the drop in US Bancorp's long position.| Synovus Financial vs. MNB Holdings Corp | Synovus Financial vs. Harbor Bankshares | Synovus Financial vs. Oconee Financial | Synovus Financial vs. Mission Valley Bancorp |
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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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