Correlation Between Synovus Financial and State Street

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

Diversification Opportunities for Synovus Financial and State Street

0.05

Correlation Coefficient

Synovus Financial  State Street

Significant diversification

The 3 months correlation between Synovus and State is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Synovus Financial Corp and State Street in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on State Street 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 State Street. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of State Street has no effect on the direction of Synovus Financial i.e., Synovus Financial and State Street go up and down completely randomly.

Pair Corralation between Synovus Financial and State Street

Assuming the 90 days trading horizon Synovus Financial Corp is expected to generate 0.58 times more return on investment than State Street. However, Synovus Financial Corp is 1.73 times less risky than State Street. It trades about 0.19 of its potential returns per unit of risk. State Street is currently generating about 0.07 per unit of risk. If you would invest  2,485  in Synovus Financial Corp on September 3, 2024 and sell it today you would earn a total of  85.00  from holding Synovus Financial Corp or generate 3.42% return on investment over 90 days.

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

Synovus Financial Corp  vs.  State Street

Synovus Financial Corp

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Synovus Financial Corp are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, Synovus Financial is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

State Street

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in State Street are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, State Street 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 State Street

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

The idea behind Synovus Financial Corp and State Street 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.