Correlation Between Synovus Financial and Carsales
Can any of the company-specific risk be diversified away by investing in both Synovus Financial and Carsales 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 Carsales 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 CarsalesCom, you can compare the effects of market volatilities on Synovus Financial and Carsales 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 Carsales. Check out your portfolio center. Please also check ongoing floating volatility patterns of Synovus Financial and Carsales.
Diversification Opportunities for Synovus Financial and Carsales
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Synovus and Carsales is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Synovus Financial Corp and CarsalesCom in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CarsalesCom 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 Carsales. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CarsalesCom has no effect on the direction of Synovus Financial i.e., Synovus Financial and Carsales go up and down completely randomly.
Pair Corralation between Synovus Financial and Carsales
Assuming the 90 days trading horizon Synovus Financial Corp is expected to generate 1.31 times more return on investment than Carsales. However, Synovus Financial is 1.31 times more volatile than CarsalesCom. It trades about 0.09 of its potential returns per unit of risk. CarsalesCom is currently generating about 0.09 per unit of risk. If you would invest 2,626 in Synovus Financial Corp on October 24, 2024 and sell it today you would earn a total of 2,674 from holding Synovus Financial Corp or generate 101.83% 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. CarsalesCom
Performance |
| Timeline |
| Synovus Financial Corp |
| CarsalesCom |
Synovus Financial and Carsales Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Synovus Financial and Carsales
The main advantage of trading using opposite Synovus Financial and Carsales positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Synovus Financial position performs unexpectedly, Carsales 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 Carsales will offset losses from the drop in Carsales' long position.| Synovus Financial vs. CEOTRONICS | Synovus Financial vs. THAI BEVERAGE | Synovus Financial vs. Lamar Advertising | Synovus Financial vs. Cleanaway Waste Management |
| Carsales vs. Corporate Office Properties | Carsales vs. DATATEC LTD 2 | Carsales vs. Cass Information Systems | Carsales vs. Information Services International Dentsu |
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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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