Correlation Between Synchrony Financial and Cornish Metals

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Can any of the company-specific risk be diversified away by investing in both Synchrony Financial and Cornish Metals 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 Synchrony Financial and Cornish Metals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Synchrony Financial and Cornish Metals, you can compare the effects of market volatilities on Synchrony Financial and Cornish Metals 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 Synchrony Financial with a short position of Cornish Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Synchrony Financial and Cornish Metals.

Diversification Opportunities for Synchrony Financial and Cornish Metals

0.65
  Correlation Coefficient

Poor diversification

The 3 months correlation between Synchrony and Cornish is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Synchrony Financial and Cornish Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cornish Metals and Synchrony 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 Synchrony Financial are associated (or correlated) with Cornish Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cornish Metals has no effect on the direction of Synchrony Financial i.e., Synchrony Financial and Cornish Metals go up and down completely randomly.

Pair Corralation between Synchrony Financial and Cornish Metals

Assuming the 90 days trading horizon Synchrony Financial is expected to generate 2.43 times less return on investment than Cornish Metals. But when comparing it to its historical volatility, Synchrony Financial is 3.18 times less risky than Cornish Metals. It trades about 0.07 of its potential returns per unit of risk. Cornish Metals is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  790.00  in Cornish Metals on September 12, 2024 and sell it today you would earn a total of  25.00  from holding Cornish Metals or generate 3.16% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy95.45%
ValuesDaily Returns

Synchrony Financial  vs.  Cornish Metals

 Performance 
       Timeline  
Synchrony Financial 

Risk-Adjusted Performance

17 of 100

 
Weak
 
Strong
Solid
Compared to the overall equity markets, risk-adjusted returns on investments in Synchrony Financial are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Synchrony Financial unveiled solid returns over the last few months and may actually be approaching a breakup point.
Cornish Metals 

Risk-Adjusted Performance

8 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in Cornish Metals are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Cornish Metals unveiled solid returns over the last few months and may actually be approaching a breakup point.

Synchrony Financial and Cornish Metals Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Synchrony Financial and Cornish Metals

The main advantage of trading using opposite Synchrony Financial and Cornish Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Synchrony Financial position performs unexpectedly, Cornish Metals 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 Cornish Metals will offset losses from the drop in Cornish Metals' long position.
The idea behind Synchrony Financial and Cornish Metals 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 Commodity Directory module to find actively traded commodities issued by global exchanges.

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