Correlation Between Walmart and Synovus Financial

Can any of the company-specific risk be diversified away by investing in both Walmart and Synovus Financial 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 Walmart and Synovus Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Walmart and Synovus Financial Corp, you can compare the effects of market volatilities on Walmart and Synovus Financial 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 Walmart with a short position of Synovus Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Walmart and Synovus Financial.

Diversification Opportunities for Walmart and Synovus Financial

0.85

Correlation Coefficient

Walmart  Synovus Financial

Very poor diversification

The 3 months correlation between Walmart and Synovus is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Walmart and Synovus Financial Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Synovus Financial Corp and Walmart 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 Walmart are associated (or correlated) with Synovus Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Synovus Financial Corp has no effect on the direction of Walmart i.e., Walmart and Synovus Financial go up and down completely randomly.

Pair Corralation between Walmart and Synovus Financial

Assuming the 90 days trading horizon Walmart is expected to generate 0.86 times more return on investment than Synovus Financial. However, Walmart is 1.16 times less risky than Synovus Financial. It trades about -0.09 of its potential returns per unit of risk. Synovus Financial Corp is currently generating about -0.09 per unit of risk. If you would invest  8,728  in Walmart on December 25, 2024 and sell it today you would lose (863.00) from holding Walmart or give up 9.89% of portfolio value over 90 days.

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

Walmart  vs.  Synovus Financial Corp

Walmart

Risk-Adjusted Performance

Very Weak

Over the last 90 days Walmart 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.

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.

Pair Trading with Walmart and Synovus Financial

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

The idea behind Walmart and Synovus Financial Corp 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.

Check out your portfolio center.

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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.