Correlation Between Synovus Financial and KeyCorp

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

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

Diversification Opportunities for Synovus Financial and KeyCorp

-0.48

Correlation Coefficient

Synovus Financial  KeyCorp

Very good diversification

The 3 months correlation between Synovus and KeyCorp is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding Synovus Financial Corp and KeyCorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KeyCorp and Synovus 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 Synovus Financial Corp are associated (or correlated) with KeyCorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KeyCorp has no effect on the direction of Synovus Financial i.e., Synovus Financial and KeyCorp go up and down completely randomly.

Pair Corralation between Synovus Financial and KeyCorp

Assuming the 90 days trading horizon Synovus Financial Corp is expected to generate 0.32 times more return on investment than KeyCorp. However, Synovus Financial Corp is 3.1 times less risky than KeyCorp. It trades about 0.1 of its potential returns per unit of risk. KeyCorp is currently generating about 0.02 per unit of risk. If you would invest  2,460  in Synovus Financial Corp on October 2, 2024 and sell it today you would earn a total of  37.00  from holding Synovus Financial Corp or generate 1.5% return on investment over 90 days.

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

Synovus Financial Corp  vs.  KeyCorp

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.

KeyCorp

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in KeyCorp are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong basic indicators, KeyCorp is not utilizing all of its potentials. The new stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Synovus Financial and KeyCorp

The main advantage of trading using opposite Synovus Financial and KeyCorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Synovus Financial position performs unexpectedly, KeyCorp 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 KeyCorp will offset losses from the drop in KeyCorp's long position.

The idea behind Synovus Financial Corp and KeyCorp 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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.