Correlation Between Synchrony Financial and FirstCash
Can any of the company-specific risk be diversified away by investing in both Synchrony Financial and FirstCash 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 FirstCash into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Synchrony Financial and FirstCash, you can compare the effects of market volatilities on Synchrony Financial and FirstCash 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 FirstCash. Check out your portfolio center. Please also check ongoing floating volatility patterns of Synchrony Financial and FirstCash.
Diversification Opportunities for Synchrony Financial and FirstCash
-0.57 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Synchrony and FirstCash is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding Synchrony Financial and FirstCash in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FirstCash 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 FirstCash. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FirstCash has no effect on the direction of Synchrony Financial i.e., Synchrony Financial and FirstCash go up and down completely randomly.
Pair Corralation between Synchrony Financial and FirstCash
Assuming the 90 days trading horizon Synchrony Financial is expected to generate 0.28 times more return on investment than FirstCash. However, Synchrony Financial is 3.56 times less risky than FirstCash. It trades about 0.12 of its potential returns per unit of risk. FirstCash is currently generating about 0.03 per unit of risk. If you would invest 2,349 in Synchrony Financial on August 24, 2024 and sell it today you would earn a total of 262.00 from holding Synchrony Financial or generate 11.15% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 39.52% |
| Values | Daily Returns |
Synchrony Financial vs. FirstCash
Performance |
| Timeline |
| Synchrony Financial |
| FirstCash |
Synchrony Financial and FirstCash Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Synchrony Financial and FirstCash
The main advantage of trading using opposite Synchrony Financial and FirstCash positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Synchrony Financial position performs unexpectedly, FirstCash 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 FirstCash will offset losses from the drop in FirstCash's long position.| Synchrony Financial vs. Synchrony Financial | Synchrony Financial vs. Enova International | Synchrony Financial vs. EZCORP Inc | Synchrony Financial vs. World Acceptance |
| FirstCash vs. World Acceptance | FirstCash vs. Enova International | FirstCash vs. Green Dot | FirstCash vs. Medallion Financial Corp |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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