Correlation Between RenaissanceRe Holdings and Synovus Financial

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

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

Diversification Opportunities for RenaissanceRe Holdings and Synovus Financial

-0.27

Correlation Coefficient

RenaissanceRe Holdings  Synovus Financial

Very good diversification

The 3 months correlation between RenaissanceRe and Synovus is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding RenaissanceRe Holdings 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 RenaissanceRe 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 RenaissanceRe Holdings 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 RenaissanceRe Holdings i.e., RenaissanceRe Holdings and Synovus Financial go up and down completely randomly.

Pair Corralation between RenaissanceRe Holdings and Synovus Financial

Assuming the 90 days trading horizon RenaissanceRe Holdings is expected to generate 1.35 times less return on investment than Synovus Financial. But when comparing it to its historical volatility, RenaissanceRe Holdings is 1.59 times less risky than Synovus Financial. It trades about 0.05 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  2,007  in Synovus Financial Corp on September 23, 2024 and sell it today you would earn a total of  497.00  from holding Synovus Financial Corp or generate 24.76% return on investment over 90 days.

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

RenaissanceRe Holdings  vs.  Synovus Financial Corp

RenaissanceRe Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days RenaissanceRe Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, RenaissanceRe Holdings is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Synovus Financial Corp

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Synovus Financial Corp are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, Synovus Financial is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with RenaissanceRe Holdings and Synovus Financial

The main advantage of trading using opposite RenaissanceRe Holdings and Synovus Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if RenaissanceRe Holdings 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 RenaissanceRe Holdings 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.