Correlation Between Synthomer Plc and Synchrony Financial
Can any of the company-specific risk be diversified away by investing in both Synthomer Plc and Synchrony Financial 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 Synthomer Plc and Synchrony Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Synthomer plc and Synchrony Financial, you can compare the effects of market volatilities on Synthomer Plc and Synchrony Financial 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 Synthomer Plc with a short position of Synchrony Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Synthomer Plc and Synchrony Financial.
Diversification Opportunities for Synthomer Plc and Synchrony Financial
-0.82 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Synthomer and Synchrony is -0.82. Overlapping area represents the amount of risk that can be diversified away by holding Synthomer plc and Synchrony Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Synchrony Financial and Synthomer Plc 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 Synthomer plc are associated (or correlated) with Synchrony Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Synchrony Financial has no effect on the direction of Synthomer Plc i.e., Synthomer Plc and Synchrony Financial go up and down completely randomly.
Pair Corralation between Synthomer Plc and Synchrony Financial
Assuming the 90 days trading horizon Synthomer Plc is expected to generate 1.0 times less return on investment than Synchrony Financial. In addition to that, Synthomer Plc is 2.2 times more volatile than Synchrony Financial. It trades about 0.07 of its total potential returns per unit of risk. Synchrony Financial is currently generating about 0.16 per unit of volatility. If you would invest 6,582 in Synchrony Financial on September 14, 2024 and sell it today you would earn a total of 281.00 from holding Synchrony Financial or generate 4.27% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Synthomer plc vs. Synchrony Financial
Performance |
| Timeline |
| Synthomer plc |
| Synchrony Financial |
Synthomer Plc and Synchrony Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Synthomer Plc and Synchrony Financial
The main advantage of trading using opposite Synthomer Plc and Synchrony Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Synthomer Plc position performs unexpectedly, Synchrony Financial 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 Synchrony Financial will offset losses from the drop in Synchrony Financial's long position.| Synthomer Plc vs. CAP LEASE AVIATION | Synthomer Plc vs. Melia Hotels | Synthomer Plc vs. AMG Advanced Metallurgical | Synthomer Plc vs. METALL ZUG AG |
| Synchrony Financial vs. Samsung Electronics Co | Synchrony Financial vs. Samsung Electronics Co | Synchrony Financial vs. Hyundai Motor | Synchrony Financial vs. Reliance Industries Ltd |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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