Correlation Between Gold Road and Synchrony Financial

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

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

Diversification Opportunities for Gold Road and Synchrony Financial

-0.21

Correlation Coefficient

Gold Road  Synchrony Financial

Very good diversification

The 3 months correlation between Gold and Synchrony is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding Gold Road Resources and Synchrony Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Synchrony Financial and Gold Road 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 Gold Road Resources are associated (or correlated) with Synchrony Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Synchrony Financial has no effect on the direction of Gold Road i.e., Gold Road and Synchrony Financial go up and down completely randomly.

Pair Corralation between Gold Road and Synchrony Financial

Assuming the 90 days horizon Gold Road Resources is expected to generate 1.0 times more return on investment than Synchrony Financial. However, Gold Road Resources is 1.0 times less risky than Synchrony Financial. It trades about 0.13 of its potential returns per unit of risk. Synchrony Financial is currently generating about -0.16 per unit of risk. If you would invest  119.00  in Gold Road Resources on December 22, 2024 and sell it today you would earn a total of  20.00  from holding Gold Road Resources or generate 16.81% return on investment over 90 days.

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

Gold Road Resources  vs.  Synchrony Financial

Gold Road Resources

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Gold Road Resources are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, Gold Road reported solid returns over the last few months and may actually be approaching a breakup point.

Synchrony Financial

Risk-Adjusted Performance

Very Weak

Over the last 90 days Synchrony Financial has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Gold Road and Synchrony Financial

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

The idea behind Gold Road Resources and Synchrony Financial 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.