Correlation Between Synchrony Financial and Old Market
Can any of the company-specific risk be diversified away by investing in both Synchrony Financial and Old Market 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 Old Market into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Synchrony Financial and Old Market Capital, you can compare the effects of market volatilities on Synchrony Financial and Old Market 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 Old Market. Check out your portfolio center. Please also check ongoing floating volatility patterns of Synchrony Financial and Old Market.
Diversification Opportunities for Synchrony Financial and Old Market
-0.32 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Synchrony and Old is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Synchrony Financial and Old Market Capital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Old Market Capital 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 Old Market. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Old Market Capital has no effect on the direction of Synchrony Financial i.e., Synchrony Financial and Old Market go up and down completely randomly.
Pair Corralation between Synchrony Financial and Old Market
Assuming the 90 days trading horizon Synchrony Financial is expected to generate 0.22 times more return on investment than Old Market. However, Synchrony Financial is 4.61 times less risky than Old Market. It trades about 0.09 of its potential returns per unit of risk. Old Market Capital is currently generating about 0.01 per unit of risk. If you would invest 2,540 in Synchrony Financial on August 28, 2024 and sell it today you would earn a total of 77.00 from holding Synchrony Financial or generate 3.03% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Synchrony Financial vs. Old Market Capital
Performance |
| Timeline |
| Synchrony Financial |
| Old Market Capital |
Synchrony Financial and Old Market Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Synchrony Financial and Old Market
The main advantage of trading using opposite Synchrony Financial and Old Market positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Synchrony Financial position performs unexpectedly, Old Market 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 Old Market will offset losses from the drop in Old Market's long position.| Synchrony Financial vs. Synchrony Financial | Synchrony Financial vs. Enova International | Synchrony Financial vs. EZCORP Inc | Synchrony Financial vs. World Acceptance |
| Old Market vs. Synchrony Financial | Old Market vs. Enova International | Old Market vs. EZCORP Inc | Old Market vs. World Acceptance |
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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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