Correlation Between Synovus Financial and Lifeway Foods

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

Diversification Opportunities for Synovus Financial and Lifeway Foods

-0.48

Correlation Coefficient

Synovus Financial  Lifeway Foods

Very good diversification

The 3 months correlation between Synovus and Lifeway is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding Synovus Financial Corp and Lifeway Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lifeway Foods 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 Lifeway Foods. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lifeway Foods has no effect on the direction of Synovus Financial i.e., Synovus Financial and Lifeway Foods go up and down completely randomly.

Pair Corralation between Synovus Financial and Lifeway Foods

Assuming the 90 days trading horizon Synovus Financial is expected to generate 2.5 times less return on investment than Lifeway Foods. But when comparing it to its historical volatility, Synovus Financial Corp is 2.46 times less risky than Lifeway Foods. It trades about 0.12 of its potential returns per unit of risk. Lifeway Foods is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  1,130  in Lifeway Foods on October 4, 2024 and sell it today you would earn a total of  1,130  from holding Lifeway Foods or generate 100.0% return on investment over 90 days.

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

Synovus Financial Corp  vs.  Lifeway Foods

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 fragile basic indicators, Synovus Financial unveiled solid returns over the last few months and may actually be approaching a breakup point.

Lifeway Foods

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Lifeway Foods has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Lifeway Foods 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 Lifeway Foods

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

The idea behind Synovus Financial Corp and Lifeway Foods 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 Global Correlations module to find global opportunities by holding instruments from different markets.