Correlation Between Synovus Financial and Southern First

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

Diversification Opportunities for Synovus Financial and Southern First

0.98
  Correlation Coefficient

Almost no diversification

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

Pair Corralation between Synovus Financial and Southern First

Considering the 90-day investment horizon Synovus Financial Corp is expected to under-perform the Southern First. But the stock apears to be less risky and, when comparing its historical volatility, Synovus Financial Corp is 1.27 times less risky than Southern First. The stock trades about -0.36 of its potential returns per unit of risk. The Southern First Bancshares is currently generating about -0.17 of returns per unit of risk over similar time horizon. If you would invest  4,401  in Southern First Bancshares on September 23, 2024 and sell it today you would lose (336.00) from holding Southern First Bancshares or give up 7.63% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Strong
Accuracy100.0%
ValuesDaily Returns

Synovus Financial Corp  vs.  Southern First Bancshares

 Performance 
       Timeline  
Synovus Financial Corp 

Risk-Adjusted Performance

6 of 100

 
Weak
 
Strong
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.
Southern First Bancshares 

Risk-Adjusted Performance

10 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in Southern First Bancshares are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unfluctuating basic indicators, Southern First unveiled solid returns over the last few months and may actually be approaching a breakup point.

Synovus Financial and Southern First Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Synovus Financial and Southern First

The main advantage of trading using opposite Synovus Financial and Southern First positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Synovus Financial position performs unexpectedly, Southern First 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 Southern First will offset losses from the drop in Southern First's long position.
The idea behind Synovus Financial Corp and Southern First Bancshares 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.

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