Correlation Between Synovus Financial and Lendingtree

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

Diversification Opportunities for Synovus Financial and Lendingtree

-0.78

Correlation Coefficient

Synovus Financial  Lendingtree

Pay attention - limited upside

The 3 months correlation between Synovus and Lendingtree is -0.78. Overlapping area represents the amount of risk that can be diversified away by holding Synovus Financial Corp and Lendingtree in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lendingtree 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 Lendingtree. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lendingtree has no effect on the direction of Synovus Financial i.e., Synovus Financial and Lendingtree go up and down completely randomly.

Pair Corralation between Synovus Financial and Lendingtree

Assuming the 90 days trading horizon Synovus Financial Corp is expected to generate 0.09 times more return on investment than Lendingtree. However, Synovus Financial Corp is 11.13 times less risky than Lendingtree. It trades about -0.17 of its potential returns per unit of risk. Lendingtree is currently generating about -0.06 per unit of risk. If you would invest  2,515  in Synovus Financial Corp on October 10, 2024 and sell it today you would lose (23.00) from holding Synovus Financial Corp or give up 0.91% of portfolio value over 90 days.

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

Synovus Financial Corp  vs.  Lendingtree

Synovus Financial Corp

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Synovus Financial Corp are ranked lower than 6 (%) 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 current stock price tumult, may contribute to shorter-term losses for the shareholders.

Lendingtree

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Lendingtree has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's technical and fundamental indicators remain rather sound which may send shares a bit higher in February 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Synovus Financial and Lendingtree

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

The idea behind Synovus Financial Corp and Lendingtree 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.