Correlation Between Synchrony Financial and Calculus VCT

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

By analyzing existing cross correlation between Synchrony Financial and Calculus VCT plc, you can compare the effects of market volatilities on Synchrony Financial and Calculus VCT 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 Calculus VCT. Check out your portfolio center. Please also check ongoing floating volatility patterns of Synchrony Financial and Calculus VCT.

Diversification Opportunities for Synchrony Financial and Calculus VCT

-0.42

Correlation Coefficient

Synchrony Financial  Calculus VCT

Very good diversification

The 3 months correlation between Synchrony and Calculus is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding Synchrony Financial and Calculus VCT plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Calculus VCT plc 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 Calculus VCT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Calculus VCT plc has no effect on the direction of Synchrony Financial i.e., Synchrony Financial and Calculus VCT go up and down completely randomly.

Pair Corralation between Synchrony Financial and Calculus VCT

Assuming the 90 days trading horizon Synchrony Financial is expected to generate 0.75 times more return on investment than Calculus VCT. However, Synchrony Financial is 1.34 times less risky than Calculus VCT. It trades about -0.02 of its potential returns per unit of risk. Calculus VCT plc is currently generating about -0.16 per unit of risk. If you would invest  6,732  in Synchrony Financial on October 7, 2024 and sell it today you would lose (114.00) from holding Synchrony Financial or give up 1.69% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Synchrony Financial  vs.  Calculus VCT plc

Synchrony Financial

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Synchrony Financial are ranked lower than 12 (%) 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.

Calculus VCT plc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Calculus VCT plc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's technical and fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Pair Trading with Synchrony Financial and Calculus VCT

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

The idea behind Synchrony Financial and Calculus VCT plc 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.

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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.