Correlation Between Synovus Financial and Pinnacle Financial

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

Diversification Opportunities for Synovus Financial and Pinnacle Financial

0.98

Correlation Coefficient

Synovus Financial  Pinnacle Financial

Almost no diversification

The 3 months correlation between Synovus and Pinnacle is 0.98. Overlapping area represents the amount of risk that can be diversified away by holding Synovus Financial Corp and Pinnacle Financial Partners in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pinnacle Financial 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 Pinnacle Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pinnacle Financial has no effect on the direction of Synovus Financial i.e., Synovus Financial and Pinnacle Financial go up and down completely randomly.

Pair Corralation between Synovus Financial and Pinnacle Financial

Considering the 90-day investment horizon Synovus Financial Corp is expected to under-perform the Pinnacle Financial. But the stock apears to be less risky and, when comparing its historical volatility, Synovus Financial Corp is 1.02 times less risky than Pinnacle Financial. The stock trades about -0.36 of its potential returns per unit of risk. The Pinnacle Financial Partners is currently generating about -0.32 of returns per unit of risk over similar time horizon. If you would invest  12,618  in Pinnacle Financial Partners on September 23, 2024 and sell it today you would lose (1,394) from holding Pinnacle Financial Partners or give up 11.05% of portfolio value over 90 days.

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

Synovus Financial Corp  vs.  Pinnacle Financial Partners

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 fairly unfluctuating basic indicators, Synovus Financial showed solid returns over the last few months and may actually be approaching a breakup point.

Pinnacle Financial

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Pinnacle Financial Partners are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Even with relatively conflicting technical and fundamental indicators, Pinnacle Financial reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Synovus Financial and Pinnacle Financial

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

The idea behind Synovus Financial Corp and Pinnacle Financial Partners 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.