Correlation Between Synovus Financial and WESTERN DIGITAL

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

Diversification Opportunities for Synovus Financial and WESTERN DIGITAL

0.36

Correlation Coefficient

Synovus Financial  WESTERN DIGITAL

Weak diversification

The 3 months correlation between Synovus and WESTERN is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Synovus Financial Corp and WESTERN DIGITAL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WESTERN DIGITAL 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 WESTERN DIGITAL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WESTERN DIGITAL has no effect on the direction of Synovus Financial i.e., Synovus Financial and WESTERN DIGITAL go up and down completely randomly.

Pair Corralation between Synovus Financial and WESTERN DIGITAL

Assuming the 90 days trading horizon Synovus Financial Corp is expected to under-perform the WESTERN DIGITAL. But the stock apears to be less risky and, when comparing its historical volatility, Synovus Financial Corp is 1.22 times less risky than WESTERN DIGITAL. The stock trades about -0.03 of its potential returns per unit of risk. The WESTERN DIGITAL is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  6,336  in WESTERN DIGITAL on October 26, 2024 and sell it today you would earn a total of  194.00  from holding WESTERN DIGITAL or generate 3.06% return on investment over 90 days.

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

Synovus Financial Corp  vs.  WESTERN DIGITAL

Synovus Financial Corp

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Synovus Financial Corp are ranked lower than 9 (%) 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.

WESTERN DIGITAL

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in WESTERN DIGITAL are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable fundamental indicators, WESTERN DIGITAL is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Synovus Financial and WESTERN DIGITAL

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

The idea behind Synovus Financial Corp and WESTERN DIGITAL 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.