Correlation Between Synovus Financial and Microsoft
Can any of the company-specific risk be diversified away by investing in both Synovus Financial and Microsoft 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 Microsoft 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 Microsoft, you can compare the effects of market volatilities on Synovus Financial and Microsoft 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 Microsoft. Check out your portfolio center. Please also check ongoing floating volatility patterns of Synovus Financial and Microsoft.
Diversification Opportunities for Synovus Financial and Microsoft
0.2 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Synovus and Microsoft is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Synovus Financial Corp and Microsoft in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Microsoft 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 Microsoft. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Microsoft has no effect on the direction of Synovus Financial i.e., Synovus Financial and Microsoft go up and down completely randomly.
Pair Corralation between Synovus Financial and Microsoft
Assuming the 90 days trading horizon Synovus Financial Corp is expected to generate 1.33 times more return on investment than Microsoft. However, Synovus Financial is 1.33 times more volatile than Microsoft. It trades about 0.25 of its potential returns per unit of risk. Microsoft is currently generating about 0.12 per unit of risk. If you would invest 4,840 in Synovus Financial Corp on October 29, 2024 and sell it today you would earn a total of 410.00 from holding Synovus Financial Corp or generate 8.47% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Synovus Financial Corp vs. Microsoft
Performance |
| Timeline |
| Synovus Financial Corp |
| Microsoft |
Synovus Financial and Microsoft Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Synovus Financial and Microsoft
The main advantage of trading using opposite Synovus Financial and Microsoft positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Synovus Financial position performs unexpectedly, Microsoft 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 Microsoft will offset losses from the drop in Microsoft's long position.| Synovus Financial vs. Monster Beverage Corp | Synovus Financial vs. Thai Beverage Public | Synovus Financial vs. American Public Education | Synovus Financial vs. Grand Canyon Education |
| Microsoft vs. SIERRA METALS | Microsoft vs. TITANIUM TRANSPORTGROUP | Microsoft vs. ARDAGH METAL PACDL 0001 | Microsoft vs. FIREWEED METALS P |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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