Correlation Between Brockhaus Capital and Synovus Financial

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

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

Diversification Opportunities for Brockhaus Capital and Synovus Financial

-0.83

Correlation Coefficient

Brockhaus Capital  Synovus Financial

Pay attention - limited upside

The 3 months correlation between Brockhaus and Synovus is -0.83. Overlapping area represents the amount of risk that can be diversified away by holding Brockhaus Capital Management 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 Brockhaus Capital 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 Brockhaus Capital Management 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 Brockhaus Capital i.e., Brockhaus Capital and Synovus Financial go up and down completely randomly.

Pair Corralation between Brockhaus Capital and Synovus Financial

Assuming the 90 days trading horizon Brockhaus Capital Management is expected to under-perform the Synovus Financial. But the stock apears to be less risky and, when comparing its historical volatility, Brockhaus Capital Management is 1.16 times less risky than Synovus Financial. The stock trades about -0.08 of its potential returns per unit of risk. The Synovus Financial Corp is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  4,446  in Synovus Financial Corp on September 23, 2024 and sell it today you would earn a total of  354.00  from holding Synovus Financial Corp or generate 7.96% return on investment over 90 days.

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

Brockhaus Capital Management  vs.  Synovus Financial Corp

Brockhaus Capital

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Brockhaus Capital Management has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's technical indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Synovus Financial Corp

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Synovus Financial Corp are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Synovus Financial reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Brockhaus Capital and Synovus Financial

The main advantage of trading using opposite Brockhaus Capital and Synovus Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Brockhaus Capital 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 Brockhaus Capital Management 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.