Correlation Between THRACE PLASTICS and Synchrony Financial
Can any of the company-specific risk be diversified away by investing in both THRACE PLASTICS 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 THRACE PLASTICS and Synchrony Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between THRACE PLASTICS and Synchrony Financial, you can compare the effects of market volatilities on THRACE PLASTICS 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 THRACE PLASTICS with a short position of Synchrony Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of THRACE PLASTICS and Synchrony Financial.
Diversification Opportunities for THRACE PLASTICS and Synchrony Financial
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between THRACE and Synchrony is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding THRACE PLASTICS and Synchrony Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Synchrony Financial and THRACE PLASTICS 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 THRACE PLASTICS 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 THRACE PLASTICS i.e., THRACE PLASTICS and Synchrony Financial go up and down completely randomly.
Pair Corralation between THRACE PLASTICS and Synchrony Financial
Assuming the 90 days trading horizon THRACE PLASTICS is expected to generate 5.83 times less return on investment than Synchrony Financial. But when comparing it to its historical volatility, THRACE PLASTICS is 1.77 times less risky than Synchrony Financial. It trades about 0.05 of its potential returns per unit of risk. Synchrony Financial is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest 3,962 in Synchrony Financial on October 13, 2024 and sell it today you would earn a total of 2,383 from holding Synchrony Financial or generate 60.15% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
THRACE PLASTICS vs. Synchrony Financial
Performance |
| Timeline |
| THRACE PLASTICS |
| Synchrony Financial |
THRACE PLASTICS and Synchrony Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with THRACE PLASTICS and Synchrony Financial
The main advantage of trading using opposite THRACE PLASTICS and Synchrony Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if THRACE PLASTICS 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.| THRACE PLASTICS vs. Fast Retailing Co | THRACE PLASTICS vs. Forsys Metals Corp | THRACE PLASTICS vs. FIREWEED METALS P | THRACE PLASTICS vs. National Retail Properties |
| Synchrony Financial vs. Tyson Foods | Synchrony Financial vs. GWILLI FOOD | Synchrony Financial vs. CVR Medical Corp | Synchrony Financial vs. Diamyd Medical AB |
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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
Other Complementary Tools
| Options Analysis Analyze and evaluate options and option chains as a potential hedge for your portfolios | |
| Odds Of Bankruptcy Get analysis of equity chance of financial distress in the next 2 years | |
| Share Portfolio Track or share privately all of your investments from the convenience of any device | |
| Portfolio Backtesting Avoid under-diversification and over-optimization by backtesting your portfolios | |
| Positions Ratings Determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance |