Correlation Between CARSALES and Synovus Financial
Can any of the company-specific risk be diversified away by investing in both CARSALES and Synovus 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 CARSALES and Synovus Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CARSALESCOM and Synovus Financial Corp, you can compare the effects of market volatilities on CARSALES and Synovus 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 CARSALES with a short position of Synovus Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of CARSALES and Synovus Financial.
Diversification Opportunities for CARSALES and Synovus Financial
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between CARSALES and Synovus is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding CARSALESCOM and Synovus Financial Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Synovus Financial Corp and CARSALES 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 CARSALESCOM are associated (or correlated) with Synovus Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Synovus Financial Corp has no effect on the direction of CARSALES i.e., CARSALES and Synovus Financial go up and down completely randomly.
Pair Corralation between CARSALES and Synovus Financial
Assuming the 90 days trading horizon CARSALESCOM is expected to generate 0.97 times more return on investment than Synovus Financial. However, CARSALESCOM is 1.03 times less risky than Synovus Financial. It trades about 0.29 of its potential returns per unit of risk. Synovus Financial Corp is currently generating about 0.22 per unit of risk. If you would invest 2,200 in CARSALESCOM on November 4, 2024 and sell it today you would earn a total of 240.00 from holding CARSALESCOM or generate 10.91% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
CARSALESCOM vs. Synovus Financial Corp
Performance |
| Timeline |
| CARSALESCOM |
| Synovus Financial Corp |
CARSALES and Synovus Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CARSALES and Synovus Financial
The main advantage of trading using opposite CARSALES and Synovus Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CARSALES position performs unexpectedly, Synovus 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 Synovus Financial will offset losses from the drop in Synovus Financial's long position.| CARSALES vs. Fast Retailing Co | CARSALES vs. FAST RETAIL ADR | CARSALES vs. SIDETRADE EO 1 | CARSALES vs. TRADEDOUBLER AB SK |
| Synovus Financial vs. SIVERS SEMICONDUCTORS AB | Synovus Financial vs. NorAm Drilling AS | Synovus Financial vs. Volkswagen AG | Synovus Financial vs. Darden Restaurants |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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