Correlation Between Micron Technology and Synovus Financial

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

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

Diversification Opportunities for Micron Technology and Synovus Financial

0.09

Correlation Coefficient

Micron Technology  Synovus Financial

Significant diversification

The 3 months correlation between Micron and Synovus is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding Micron Technology 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 Micron Technology 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 Micron Technology 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 Micron Technology i.e., Micron Technology and Synovus Financial go up and down completely randomly.

Pair Corralation between Micron Technology and Synovus Financial

Allowing for the 90-day total investment horizon Micron Technology is expected to under-perform the Synovus Financial. In addition to that, Micron Technology is 1.43 times more volatile than Synovus Financial Corp. It trades about -0.08 of its total potential returns per unit of risk. Synovus Financial Corp is currently generating about 0.11 per unit of volatility. If you would invest  3,725  in Synovus Financial Corp on September 23, 2024 and sell it today you would earn a total of  1,310  from holding Synovus Financial Corp or generate 35.17% return on investment over 90 days.

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

Micron Technology  vs.  Synovus Financial Corp

Micron Technology

Risk-Adjusted Performance

0 of 100

Very Weak

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

Synovus Financial Corp

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Synovus Financial Corp are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating basic indicators, Synovus Financial showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Micron Technology and Synovus Financial

The main advantage of trading using opposite Micron Technology and Synovus Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Micron Technology 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 Micron Technology 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.

Check out your portfolio center.

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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.