Correlation Between CVB Financial and Synovus Financial

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

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

Diversification Opportunities for CVB Financial and Synovus Financial

0.95

Correlation Coefficient

CVB Financial  Synovus Financial

Almost no diversification

The 3 months correlation between CVB and Synovus is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding CVB Financial 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 CVB 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 CVB Financial 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 CVB Financial i.e., CVB Financial and Synovus Financial go up and down completely randomly.

Pair Corralation between CVB Financial and Synovus Financial

Assuming the 90 days horizon CVB Financial Corp is expected to under-perform the Synovus Financial. But the stock apears to be less risky and, when comparing its historical volatility, CVB Financial Corp is 1.05 times less risky than Synovus Financial. The stock trades about -0.21 of its potential returns per unit of risk. The Synovus Financial Corp is currently generating about -0.09 of returns per unit of risk over similar time horizon. If you would invest  5,211  in Synovus Financial Corp on October 9, 2024 and sell it today you would lose (161.00) from holding Synovus Financial Corp or give up 3.09% of portfolio value over 90 days.

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

CVB Financial Corp  vs.  Synovus Financial Corp

CVB Financial Corp

Risk-Adjusted Performance

11 of 100

Good

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

Synovus Financial Corp

Risk-Adjusted Performance

14 of 100

Good

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

Pair Trading with CVB Financial and Synovus Financial

The main advantage of trading using opposite CVB Financial and Synovus Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CVB Financial 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 CVB Financial 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.