Correlation Between Synchrony Financial and Lufax Holding
Can any of the company-specific risk be diversified away by investing in both Synchrony Financial and Lufax Holding 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 Lufax Holding into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Synchrony Financial and Lufax Holding, you can compare the effects of market volatilities on Synchrony Financial and Lufax Holding 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 Lufax Holding. Check out your portfolio center. Please also check ongoing floating volatility patterns of Synchrony Financial and Lufax Holding.
Diversification Opportunities for Synchrony Financial and Lufax Holding
0.26 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Synchrony and Lufax is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Synchrony Financial and Lufax Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lufax Holding 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 Lufax Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lufax Holding has no effect on the direction of Synchrony Financial i.e., Synchrony Financial and Lufax Holding go up and down completely randomly.
Pair Corralation between Synchrony Financial and Lufax Holding
Assuming the 90 days trading horizon Synchrony Financial is expected to generate 0.41 times more return on investment than Lufax Holding. However, Synchrony Financial is 2.47 times less risky than Lufax Holding. It trades about 0.05 of its potential returns per unit of risk. Lufax Holding is currently generating about -0.26 per unit of risk. If you would invest 2,027 in Synchrony Financial on August 24, 2024 and sell it today you would earn a total of 25.00 from holding Synchrony Financial or generate 1.23% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Synchrony Financial vs. Lufax Holding
Performance |
| Timeline |
| Synchrony Financial |
| Lufax Holding |
Synchrony Financial and Lufax Holding Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Synchrony Financial and Lufax Holding
The main advantage of trading using opposite Synchrony Financial and Lufax Holding positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Synchrony Financial position performs unexpectedly, Lufax Holding 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 Lufax Holding will offset losses from the drop in Lufax Holding's long position.| Synchrony Financial vs. Capital One Financial | Synchrony Financial vs. Capital One Financial | Synchrony Financial vs. Citizens Financial Group | Synchrony Financial vs. Wells Fargo |
| Lufax Holding vs. 360 Finance | Lufax Holding vs. FinVolution Group | Lufax Holding vs. Qudian Inc | Lufax Holding vs. X Financial Class |
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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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