Correlation Between Synchrony Financial and Yotta Acquisition

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

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

Diversification Opportunities for Synchrony Financial and Yotta Acquisition

0.94

Correlation Coefficient

Synchrony Financial  Yotta Acquisition

Almost no diversification

The 3 months correlation between Synchrony and Yotta is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Synchrony Financial and Yotta Acquisition in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Yotta Acquisition and Synchrony 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 Synchrony Financial are associated (or correlated) with Yotta Acquisition. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Yotta Acquisition has no effect on the direction of Synchrony Financial i.e., Synchrony Financial and Yotta Acquisition go up and down completely randomly.

Pair Corralation between Synchrony Financial and Yotta Acquisition

Considering the 90-day investment horizon Synchrony Financial is expected to generate 16.11 times more return on investment than Yotta Acquisition. However, Synchrony Financial is 16.11 times more volatile than Yotta Acquisition. It trades about 0.2 of its potential returns per unit of risk. Yotta Acquisition is currently generating about 0.17 per unit of risk. If you would invest  4,867  in Synchrony Financial on September 18, 2024 and sell it today you would earn a total of  1,988  from holding Synchrony Financial or generate 40.85% return on investment over 90 days.

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

Synchrony Financial  vs.  Yotta Acquisition

Synchrony Financial

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Synchrony Financial are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite nearly abnormal basic indicators, Synchrony Financial reported solid returns over the last few months and may actually be approaching a breakup point.

Yotta Acquisition

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Yotta Acquisition are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Yotta Acquisition is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Synchrony Financial and Yotta Acquisition

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

The idea behind Synchrony Financial and Yotta Acquisition 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.