Correlation Between National Beverage and Synovus Financial

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

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

Diversification Opportunities for National Beverage and Synovus Financial

0.89

Correlation Coefficient

National Beverage  Synovus Financial

Very poor diversification

The 3 months correlation between National and Synovus is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding National Beverage Corp 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 National Beverage 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 National Beverage Corp 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 National Beverage i.e., National Beverage and Synovus Financial go up and down completely randomly.

Pair Corralation between National Beverage and Synovus Financial

Assuming the 90 days horizon National Beverage is expected to generate 14.66 times less return on investment than Synovus Financial. But when comparing it to its historical volatility, National Beverage Corp is 1.68 times less risky than Synovus Financial. It trades about 0.02 of its potential returns per unit of risk. Synovus Financial Corp is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest  3,851  in Synovus Financial Corp on September 29, 2024 and sell it today you would earn a total of  1,069  from holding Synovus Financial Corp or generate 27.76% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	98.41%
Values	Daily Returns

National Beverage Corp  vs.  Synovus Financial Corp

National Beverage Corp

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in National Beverage Corp are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, National Beverage is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Synovus Financial Corp

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Synovus Financial Corp are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, Synovus Financial reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with National Beverage and Synovus Financial

The main advantage of trading using opposite National Beverage and Synovus Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if National Beverage 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.

The idea behind National Beverage Corp and Synovus Financial Corp 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.