Correlation Between Synovus Financial and Fast Retailing

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

Diversification Opportunities for Synovus Financial and Fast Retailing

0.15

Correlation Coefficient

Synovus Financial  Fast Retailing

Average diversification

The 3 months correlation between Synovus and Fast is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Synovus Financial Corp and Fast Retailing Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fast Retailing 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 Fast Retailing. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fast Retailing has no effect on the direction of Synovus Financial i.e., Synovus Financial and Fast Retailing go up and down completely randomly.

Pair Corralation between Synovus Financial and Fast Retailing

Assuming the 90 days trading horizon Synovus Financial is expected to generate 1.01 times less return on investment than Fast Retailing. In addition to that, Synovus Financial is 1.55 times more volatile than Fast Retailing Co. It trades about 0.05 of its total potential returns per unit of risk. Fast Retailing Co is currently generating about 0.07 per unit of volatility. If you would invest  17,833  in Fast Retailing Co on October 11, 2024 and sell it today you would earn a total of  13,557  from holding Fast Retailing Co or generate 76.02% 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.  Fast Retailing Co

Synovus Financial Corp

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Synovus Financial Corp are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, Synovus Financial unveiled solid returns over the last few months and may actually be approaching a breakup point.

Fast Retailing

Risk-Adjusted Performance

0 of 100

Weak

Over the last 90 days Fast Retailing Co has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, Fast Retailing is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Synovus Financial and Fast Retailing

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

The idea behind Synovus Financial Corp and Fast Retailing Co 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.