Correlation Between Synchrony Financial and Komercni Banka

Can any of the company-specific risk be diversified away by investing in both Synchrony Financial and Komercni Banka 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 Synchrony Financial and Komercni Banka into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Synchrony Financial and Komercni Banka, you can compare the effects of market volatilities on Synchrony Financial and Komercni Banka 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 Synchrony Financial with a short position of Komercni Banka. Check out your portfolio center. Please also check ongoing floating volatility patterns of Synchrony Financial and Komercni Banka.

Diversification Opportunities for Synchrony Financial and Komercni Banka

0.0

Correlation Coefficient

Synchrony Financial  Komercni Banka

Pay attention - limited upside

The 3 months correlation between Synchrony and Komercni is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Synchrony Financial and Komercni Banka in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Komercni Banka and Synchrony 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 Synchrony Financial are associated (or correlated) with Komercni Banka. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Komercni Banka has no effect on the direction of Synchrony Financial i.e., Synchrony Financial and Komercni Banka go up and down completely randomly.

Pair Corralation between Synchrony Financial and Komercni Banka

If you would invest  5,684  in Synchrony Financial on September 17, 2024 and sell it today you would earn a total of  1,134  from holding Synchrony Financial or generate 19.95% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Synchrony Financial  vs.  Komercni Banka

Synchrony Financial

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Synchrony Financial are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Synchrony Financial unveiled solid returns over the last few months and may actually be approaching a breakup point.

Komercni Banka

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Komercni Banka has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Komercni Banka is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Synchrony Financial and Komercni Banka

The main advantage of trading using opposite Synchrony Financial and Komercni Banka positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Synchrony Financial position performs unexpectedly, Komercni Banka 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 Komercni Banka will offset losses from the drop in Komercni Banka's long position.

The idea behind Synchrony Financial and Komercni Banka pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.