Correlation Between Kingsway Financial and Synchrony Financial

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

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

Diversification Opportunities for Kingsway Financial and Synchrony Financial

0.07

Correlation Coefficient

Kingsway Financial  Synchrony Financial

Significant diversification

The 3 months correlation between Kingsway and Synchrony is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Kingsway Financial Services and Synchrony Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Synchrony Financial and Kingsway 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 Kingsway Financial Services 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 Kingsway Financial i.e., Kingsway Financial and Synchrony Financial go up and down completely randomly.

Pair Corralation between Kingsway Financial and Synchrony Financial

Considering the 90-day investment horizon Kingsway Financial Services is expected to under-perform the Synchrony Financial. In addition to that, Kingsway Financial is 4.02 times more volatile than Synchrony Financial. It trades about -0.04 of its total potential returns per unit of risk. Synchrony Financial is currently generating about -0.01 per unit of volatility. If you would invest  2,551  in Synchrony Financial on December 22, 2024 and sell it today you would lose (12.00) from holding Synchrony Financial or give up 0.47% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.36%
Values	Daily Returns

Kingsway Financial Services  vs.  Synchrony Financial

Kingsway Financial

Risk-Adjusted Performance

Very Weak

Over the last 90 days Kingsway Financial Services has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable technical and fundamental indicators, Kingsway Financial is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

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 somewhat strong technical and fundamental indicators, Synchrony Financial is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Kingsway Financial and Synchrony Financial

The main advantage of trading using opposite Kingsway Financial and Synchrony Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kingsway Financial 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 Kingsway Financial Services 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.