Correlation Between Synchrony Financial and Atlanticus Holdings
Can any of the company-specific risk be diversified away by investing in both Synchrony Financial and Atlanticus Holdings 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 Atlanticus Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Synchrony Financial and Atlanticus Holdings Corp, you can compare the effects of market volatilities on Synchrony Financial and Atlanticus Holdings 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 Atlanticus Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Synchrony Financial and Atlanticus Holdings.
Diversification Opportunities for Synchrony Financial and Atlanticus Holdings
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Synchrony and Atlanticus is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Synchrony Financial and Atlanticus Holdings Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Atlanticus Holdings Corp 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 Atlanticus Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Atlanticus Holdings Corp has no effect on the direction of Synchrony Financial i.e., Synchrony Financial and Atlanticus Holdings go up and down completely randomly.
Pair Corralation between Synchrony Financial and Atlanticus Holdings
Assuming the 90 days trading horizon Synchrony Financial is expected to generate 4.33 times less return on investment than Atlanticus Holdings. But when comparing it to its historical volatility, Synchrony Financial is 1.21 times less risky than Atlanticus Holdings. It trades about 0.09 of its potential returns per unit of risk. Atlanticus Holdings Corp is currently generating about 0.33 of returns per unit of risk over similar time horizon. If you would invest 2,266 in Atlanticus Holdings Corp on August 24, 2024 and sell it today you would earn a total of 123.00 from holding Atlanticus Holdings Corp or generate 5.43% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Synchrony Financial vs. Atlanticus Holdings Corp
Performance |
| Timeline |
| Synchrony Financial |
| Atlanticus Holdings Corp |
Synchrony Financial and Atlanticus Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Synchrony Financial and Atlanticus Holdings
The main advantage of trading using opposite Synchrony Financial and Atlanticus Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Synchrony Financial position performs unexpectedly, Atlanticus Holdings 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 Atlanticus Holdings will offset losses from the drop in Atlanticus Holdings' long position.| Synchrony Financial vs. Lufax Holding | Synchrony Financial vs. Lexinfintech Holdings | Synchrony Financial vs. Qudian Inc | Synchrony Financial vs. Regional Management Corp |
| Atlanticus Holdings vs. Babcock Wilcox Enterprises | Atlanticus Holdings vs. XOMA Corporation | Atlanticus Holdings vs. Brighthouse Financial | Atlanticus Holdings vs. Presidio Property Trust |
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.
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