Correlation Between Synovus Financial and MT Bank

Can any of the company-specific risk be diversified away by investing in both Synovus Financial and MT Bank 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 MT Bank 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 MT Bank, you can compare the effects of market volatilities on Synovus Financial and MT Bank 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 MT Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Synovus Financial and MT Bank.

Diversification Opportunities for Synovus Financial and MT Bank

0.04

Correlation Coefficient

Synovus Financial  MT Bank

Significant diversification

The 3 months correlation between Synovus and MTB-PH is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Synovus Financial Corp and MT Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MT Bank 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 MT Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MT Bank has no effect on the direction of Synovus Financial i.e., Synovus Financial and MT Bank go up and down completely randomly.

Pair Corralation between Synovus Financial and MT Bank

Assuming the 90 days trading horizon Synovus Financial Corp is expected to generate 0.36 times more return on investment than MT Bank. However, Synovus Financial Corp is 2.79 times less risky than MT Bank. It trades about 0.1 of its potential returns per unit of risk. MT Bank is currently generating about -0.01 per unit of risk. If you would invest  2,460  in Synovus Financial Corp on October 22, 2024 and sell it today you would earn a total of  47.00  from holding Synovus Financial Corp or generate 1.91% return on investment over 90 days.

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

Synovus Financial Corp  vs.  MT Bank

Synovus Financial Corp

Risk-Adjusted Performance

0 of 100

OK

Over the last 90 days Synovus Financial Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, Synovus Financial is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

MT Bank

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days MT Bank has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong fundamental drivers, MT Bank is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Synovus Financial and MT Bank

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

The idea behind Synovus Financial Corp and MT Bank 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.