Correlation Between OneMain Holdings and Synchrony Financial
Can any of the company-specific risk be diversified away by investing in both OneMain Holdings 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 OneMain Holdings and Synchrony Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between OneMain Holdings and Synchrony Financial, you can compare the effects of market volatilities on OneMain Holdings 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 OneMain Holdings with a short position of Synchrony Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of OneMain Holdings and Synchrony Financial.
Diversification Opportunities for OneMain Holdings and Synchrony Financial
0.94 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between OneMain and Synchrony is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding OneMain Holdings and Synchrony Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Synchrony Financial and OneMain Holdings 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 OneMain Holdings 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 OneMain Holdings i.e., OneMain Holdings and Synchrony Financial go up and down completely randomly.
Pair Corralation between OneMain Holdings and Synchrony Financial
Considering the 90-day investment horizon OneMain Holdings is expected to under-perform the Synchrony Financial. But the stock apears to be less risky and, when comparing its historical volatility, OneMain Holdings is 1.05 times less risky than Synchrony Financial. The stock trades about -0.31 of its potential returns per unit of risk. The Synchrony Financial is currently generating about -0.07 of returns per unit of risk over similar time horizon. If you would invest 6,704 in Synchrony Financial on September 24, 2024 and sell it today you would lose (164.00) from holding Synchrony Financial or give up 2.45% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Strong |
Accuracy | 100.0% |
Values | Daily Returns |
OneMain Holdings vs. Synchrony Financial
Performance |
Timeline |
OneMain Holdings |
Synchrony Financial |
OneMain Holdings and Synchrony Financial Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with OneMain Holdings and Synchrony Financial
The main advantage of trading using opposite OneMain Holdings and Synchrony Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if OneMain Holdings 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.OneMain Holdings vs. Oaktree Specialty Lending | OneMain Holdings vs. Barings BDC | OneMain Holdings vs. Runway Growth Finance | OneMain Holdings vs. Ally Financial |
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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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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