Correlation Between FinVolution and Synovus Financial

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Can any of the company-specific risk be diversified away by investing in both FinVolution 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 FinVolution and Synovus Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between FinVolution Group and Synovus Financial Corp, you can compare the effects of market volatilities on FinVolution 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 FinVolution with a short position of Synovus Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of FinVolution and Synovus Financial.

Diversification Opportunities for FinVolution and Synovus Financial

0.36
  Correlation Coefficient

Weak diversification

The 3 months correlation between FinVolution and Synovus is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding FinVolution Group 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 FinVolution 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 FinVolution Group 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 FinVolution i.e., FinVolution and Synovus Financial go up and down completely randomly.

Pair Corralation between FinVolution and Synovus Financial

Given the investment horizon of 90 days FinVolution is expected to generate 1.33 times less return on investment than Synovus Financial. But when comparing it to its historical volatility, FinVolution Group is 1.28 times less risky than Synovus Financial. It trades about 0.04 of its potential returns per unit of risk. Synovus Financial Corp is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  3,305  in Synovus Financial Corp on October 4, 2024 and sell it today you would earn a total of  1,595  from holding Synovus Financial Corp or generate 48.26% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy98.8%
ValuesDaily Returns

FinVolution Group  vs.  Synovus Financial Corp

 Performance 
       Timeline  
FinVolution Group 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days FinVolution Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, FinVolution is not utilizing all of its potentials. The recent stock price fuss, may contribute to near-short-term losses for the sophisticated investors.
Synovus Financial Corp 

Risk-Adjusted Performance

12 of 100

 
Weak
 
Strong
Good
Compared to the overall equity markets, risk-adjusted returns on investments in Synovus Financial Corp are ranked lower than 12 (%) 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.

FinVolution and Synovus Financial Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with FinVolution and Synovus Financial

The main advantage of trading using opposite FinVolution and Synovus Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FinVolution 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 FinVolution Group 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.

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