Correlation Between TBC Bank and Synchrony Financial
Can any of the company-specific risk be diversified away by investing in both TBC Bank 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 TBC Bank and Synchrony Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between TBC Bank Group and Synchrony Financial, you can compare the effects of market volatilities on TBC Bank 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 TBC Bank with a short position of Synchrony Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of TBC Bank and Synchrony Financial.
Diversification Opportunities for TBC Bank and Synchrony Financial
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between TBC and Synchrony is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding TBC Bank Group and Synchrony Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Synchrony Financial and TBC Bank 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 TBC Bank Group 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 TBC Bank i.e., TBC Bank and Synchrony Financial go up and down completely randomly.
Pair Corralation between TBC Bank and Synchrony Financial
Assuming the 90 days trading horizon TBC Bank Group is expected to generate 0.88 times more return on investment than Synchrony Financial. However, TBC Bank Group is 1.14 times less risky than Synchrony Financial. It trades about 0.09 of its potential returns per unit of risk. Synchrony Financial is currently generating about 0.04 per unit of risk. If you would invest 303,000 in TBC Bank Group on October 30, 2024 and sell it today you would earn a total of 14,500 from holding TBC Bank Group or generate 4.79% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 94.87% |
| Values | Daily Returns |
TBC Bank Group vs. Synchrony Financial
Performance |
| Timeline |
| TBC Bank Group |
| Synchrony Financial |
TBC Bank and Synchrony Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with TBC Bank and Synchrony Financial
The main advantage of trading using opposite TBC Bank and Synchrony Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TBC Bank 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.| TBC Bank vs. First Class Metals | TBC Bank vs. Micron Technology | TBC Bank vs. Europa Metals | TBC Bank vs. Coeur Mining |
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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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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