Correlation Between Synovus Financial and JAPAN TOBACCO

Can any of the company-specific risk be diversified away by investing in both Synovus Financial and JAPAN TOBACCO 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 JAPAN TOBACCO 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 JAPAN TOBACCO UNSPADR12, you can compare the effects of market volatilities on Synovus Financial and JAPAN TOBACCO 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 JAPAN TOBACCO. Check out your portfolio center. Please also check ongoing floating volatility patterns of Synovus Financial and JAPAN TOBACCO.

Diversification Opportunities for Synovus Financial and JAPAN TOBACCO

0.06

Correlation Coefficient

Synovus Financial  JAPAN TOBACCO

Significant diversification

The 3 months correlation between Synovus and JAPAN is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Synovus Financial Corp and JAPAN TOBACCO UNSPADR12 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JAPAN TOBACCO UNSPADR12 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 JAPAN TOBACCO. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JAPAN TOBACCO UNSPADR12 has no effect on the direction of Synovus Financial i.e., Synovus Financial and JAPAN TOBACCO go up and down completely randomly.

Pair Corralation between Synovus Financial and JAPAN TOBACCO

Assuming the 90 days trading horizon Synovus Financial Corp is expected to under-perform the JAPAN TOBACCO. In addition to that, Synovus Financial is 1.51 times more volatile than JAPAN TOBACCO UNSPADR12. It trades about -0.06 of its total potential returns per unit of risk. JAPAN TOBACCO UNSPADR12 is currently generating about 0.0 per unit of volatility. If you would invest  1,210  in JAPAN TOBACCO UNSPADR12 on December 22, 2024 and sell it today you would lose (10.00) from holding JAPAN TOBACCO UNSPADR12 or give up 0.83% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.36%
Values	Daily Returns

Synovus Financial Corp  vs.  JAPAN TOBACCO UNSPADR12

Synovus Financial Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days Synovus Financial Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest fragile performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

JAPAN TOBACCO UNSPADR12

Risk-Adjusted Performance

Weak

Over the last 90 days JAPAN TOBACCO UNSPADR12 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, JAPAN TOBACCO is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Synovus Financial and JAPAN TOBACCO

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

The idea behind Synovus Financial Corp and JAPAN TOBACCO UNSPADR12 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.