Correlation Between Tungsten West and Synchrony Financial
Can any of the company-specific risk be diversified away by investing in both Tungsten West 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 Tungsten West and Synchrony Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Tungsten West PLC and Synchrony Financial, you can compare the effects of market volatilities on Tungsten West 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 Tungsten West with a short position of Synchrony Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tungsten West and Synchrony Financial.
Diversification Opportunities for Tungsten West and Synchrony Financial
-0.69 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Tungsten and Synchrony is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding Tungsten West PLC and Synchrony Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Synchrony Financial and Tungsten West 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 Tungsten West PLC 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 Tungsten West i.e., Tungsten West and Synchrony Financial go up and down completely randomly.
Pair Corralation between Tungsten West and Synchrony Financial
Assuming the 90 days trading horizon Tungsten West is expected to generate 1.25 times less return on investment than Synchrony Financial. In addition to that, Tungsten West is 1.87 times more volatile than Synchrony Financial. It trades about 0.09 of its total potential returns per unit of risk. Synchrony Financial is currently generating about 0.21 per unit of volatility. If you would invest 5,555 in Synchrony Financial on August 30, 2024 and sell it today you would earn a total of 1,123 from holding Synchrony Financial or generate 20.22% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Tungsten West PLC vs. Synchrony Financial
Performance |
| Timeline |
| Tungsten West PLC |
| Synchrony Financial |
Tungsten West and Synchrony Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Tungsten West and Synchrony Financial
The main advantage of trading using opposite Tungsten West and Synchrony Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tungsten West 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.| Tungsten West vs. Givaudan SA | Tungsten West vs. Antofagasta PLC | Tungsten West vs. Centamin PLC | Tungsten West vs. Atalaya Mining |
| Synchrony Financial vs. Tungsten West PLC | Synchrony Financial vs. Argo Group Limited | Synchrony Financial vs. Hardide PLC | Synchrony Financial vs. Versarien PLC |
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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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