Correlation Between Synovus Financial and Sibanye Stillwater

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

Diversification Opportunities for Synovus Financial and Sibanye Stillwater

0.13

Correlation Coefficient

Synovus Financial  Sibanye Stillwater

Average diversification

The 3 months correlation between Synovus and Sibanye is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding Synovus Financial Corp and Sibanye Stillwater Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sibanye Stillwater 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 Sibanye Stillwater. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sibanye Stillwater has no effect on the direction of Synovus Financial i.e., Synovus Financial and Sibanye Stillwater go up and down completely randomly.

Pair Corralation between Synovus Financial and Sibanye Stillwater

Assuming the 90 days trading horizon Synovus Financial Corp is expected to generate 0.51 times more return on investment than Sibanye Stillwater. However, Synovus Financial Corp is 1.97 times less risky than Sibanye Stillwater. It trades about 0.19 of its potential returns per unit of risk. Sibanye Stillwater Limited is currently generating about -0.04 per unit of risk. If you would invest  3,891  in Synovus Financial Corp on October 8, 2024 and sell it today you would earn a total of  1,089  from holding Synovus Financial Corp or generate 27.99% 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.  Sibanye Stillwater Limited

Synovus Financial Corp

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Synovus Financial Corp are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Synovus Financial unveiled solid returns over the last few months and may actually be approaching a breakup point.

Sibanye Stillwater

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sibanye Stillwater Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with Synovus Financial and Sibanye Stillwater

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

The idea behind Synovus Financial Corp and Sibanye Stillwater Limited 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.