Correlation Between Synovus Financial and Sumitomo Rubber
Can any of the company-specific risk be diversified away by investing in both Synovus Financial and Sumitomo Rubber 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 Synovus Financial and Sumitomo Rubber into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Synovus Financial Corp and Sumitomo Rubber Industries, you can compare the effects of market volatilities on Synovus Financial and Sumitomo Rubber 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 Synovus Financial with a short position of Sumitomo Rubber. Check out your portfolio center. Please also check ongoing floating volatility patterns of Synovus Financial and Sumitomo Rubber.
Diversification Opportunities for Synovus Financial and Sumitomo Rubber
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Synovus and Sumitomo is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Synovus Financial Corp and Sumitomo Rubber Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sumitomo Rubber Indu and Synovus 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 Synovus Financial Corp are associated (or correlated) with Sumitomo Rubber. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sumitomo Rubber Indu has no effect on the direction of Synovus Financial i.e., Synovus Financial and Sumitomo Rubber go up and down completely randomly.
Pair Corralation between Synovus Financial and Sumitomo Rubber
Assuming the 90 days trading horizon Synovus Financial Corp is expected to generate 1.28 times more return on investment than Sumitomo Rubber. However, Synovus Financial is 1.28 times more volatile than Sumitomo Rubber Industries. It trades about 0.03 of its potential returns per unit of risk. Sumitomo Rubber Industries is currently generating about -0.14 per unit of risk. If you would invest 5,111 in Synovus Financial Corp on October 16, 2024 and sell it today you would earn a total of 39.00 from holding Synovus Financial Corp or generate 0.76% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Synovus Financial Corp vs. Sumitomo Rubber Industries
Performance |
| Timeline |
| Synovus Financial Corp |
| Sumitomo Rubber Indu |
Synovus Financial and Sumitomo Rubber Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Synovus Financial and Sumitomo Rubber
The main advantage of trading using opposite Synovus Financial and Sumitomo Rubber positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Synovus Financial position performs unexpectedly, Sumitomo Rubber 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 Sumitomo Rubber will offset losses from the drop in Sumitomo Rubber's long position.| Synovus Financial vs. MAGIC SOFTWARE ENTR | Synovus Financial vs. Alfa Financial Software | Synovus Financial vs. AXWAY SOFTWARE EO | Synovus Financial vs. United Breweries Co |
| Sumitomo Rubber vs. Synovus Financial Corp | Sumitomo Rubber vs. SCIENCE IN SPORT | Sumitomo Rubber vs. Columbia Sportswear | Sumitomo Rubber vs. Fukuyama Transporting Co |
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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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