Correlation Between Synchrony Financial and KB Financial
Can any of the company-specific risk be diversified away by investing in both Synchrony Financial and KB 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 Synchrony Financial and KB Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Synchrony Financial and KB Financial Group, you can compare the effects of market volatilities on Synchrony Financial and KB 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 Synchrony Financial with a short position of KB Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Synchrony Financial and KB Financial.
Diversification Opportunities for Synchrony Financial and KB Financial
0.3 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Synchrony and K1BF34 is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding Synchrony Financial and KB Financial Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KB Financial Group and Synchrony 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 Synchrony Financial are associated (or correlated) with KB Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KB Financial Group has no effect on the direction of Synchrony Financial i.e., Synchrony Financial and KB Financial go up and down completely randomly.
Pair Corralation between Synchrony Financial and KB Financial
Assuming the 90 days trading horizon Synchrony Financial is expected to generate 1.37 times more return on investment than KB Financial. However, Synchrony Financial is 1.37 times more volatile than KB Financial Group. It trades about 0.19 of its potential returns per unit of risk. KB Financial Group is currently generating about -0.08 per unit of risk. If you would invest 32,417 in Synchrony Financial on October 6, 2024 and sell it today you would earn a total of 7,833 from holding Synchrony Financial or generate 24.16% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Synchrony Financial vs. KB Financial Group
Performance |
Timeline |
Synchrony Financial |
KB Financial Group |
Synchrony Financial and KB Financial Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Synchrony Financial and KB Financial
The main advantage of trading using opposite Synchrony Financial and KB Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Synchrony Financial position performs unexpectedly, KB 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 KB Financial will offset losses from the drop in KB Financial's long position.Synchrony Financial vs. Visa Inc | Synchrony Financial vs. Mastercard Incorporated | Synchrony Financial vs. PayPal Holdings | Synchrony Financial vs. Capital One Financial |
KB Financial vs. Taiwan Semiconductor Manufacturing | KB Financial vs. Apple Inc | KB Financial vs. Alibaba Group Holding | KB Financial vs. Microsoft |
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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
Other Complementary Tools
Portfolio Rebalancing Analyze risk-adjusted returns against different time horizons to find asset-allocation targets | |
Balance Of Power Check stock momentum by analyzing Balance Of Power indicator and other technical ratios | |
Risk-Return Analysis View associations between returns expected from investment and the risk you assume | |
Sign In To Macroaxis Sign in to explore Macroaxis' wealth optimization platform and fintech modules | |
Price Transformation Use Price Transformation models to analyze the depth of different equity instruments across global markets |