Correlation Between Synopsys and Splitit Payments

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

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

Diversification Opportunities for Synopsys and Splitit Payments

-0.27

Correlation Coefficient

Synopsys  Splitit Payments

Very good diversification

The 3 months correlation between Synopsys and Splitit is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding Synopsys and Splitit Payments in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Splitit Payments and Synopsys 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 Synopsys are associated (or correlated) with Splitit Payments. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Splitit Payments has no effect on the direction of Synopsys i.e., Synopsys and Splitit Payments go up and down completely randomly.

Pair Corralation between Synopsys and Splitit Payments

Given the investment horizon of 90 days Synopsys is expected to generate 0.21 times more return on investment than Splitit Payments. However, Synopsys is 4.72 times less risky than Splitit Payments. It trades about 0.03 of its potential returns per unit of risk. Splitit Payments is currently generating about -0.12 per unit of risk. If you would invest  50,225  in Synopsys on September 17, 2024 and sell it today you would earn a total of  1,737  from holding Synopsys or generate 3.46% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.46%
Values	Daily Returns

Synopsys  vs.  Splitit Payments

Synopsys

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Synopsys are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Synopsys is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Splitit Payments

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Splitit Payments has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Synopsys and Splitit Payments

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

The idea behind Synopsys and Splitit Payments 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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.