Correlation Between Banc Of and Synovus Financial
Can any of the company-specific risk be diversified away by investing in both Banc Of 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 Banc Of and Synovus Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Banc of California and Synovus Financial Corp, you can compare the effects of market volatilities on Banc Of 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 Banc Of with a short position of Synovus Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Banc Of and Synovus Financial.
Diversification Opportunities for Banc Of and Synovus Financial
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Banc and Synovus is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Banc of California 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 Banc Of 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 Banc of California 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 Banc Of i.e., Banc Of and Synovus Financial go up and down completely randomly.
Pair Corralation between Banc Of and Synovus Financial
Assuming the 90 days trading horizon Banc of California is expected to generate 0.29 times more return on investment than Synovus Financial. However, Banc of California is 3.43 times less risky than Synovus Financial. It trades about -0.15 of its potential returns per unit of risk. Synovus Financial Corp is currently generating about -0.21 per unit of risk. If you would invest 2,491 in Banc of California on October 5, 2024 and sell it today you would lose (38.00) from holding Banc of California or give up 1.53% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Strong |
Accuracy | 100.0% |
Values | Daily Returns |
Banc of California vs. Synovus Financial Corp
Performance |
Timeline |
Banc of California |
Synovus Financial Corp |
Banc Of and Synovus Financial Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Banc Of and Synovus Financial
The main advantage of trading using opposite Banc Of and Synovus Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Banc Of 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 Banc of California 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.Synovus Financial vs. Huntington Bancshares Incorporated | Synovus Financial vs. Fifth Third Bancorp | Synovus Financial vs. MT Bank | Synovus Financial vs. Citizens Financial Group, |
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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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