Correlation Between Synovus Financial and Huntington Bancshares

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

Diversification Opportunities for Synovus Financial and Huntington Bancshares

0.98

Correlation Coefficient

Synovus Financial  Huntington Bancshares

Almost no diversification

The 3 months correlation between Synovus and Huntington is 0.98. Overlapping area represents the amount of risk that can be diversified away by holding Synovus Financial Corp and Huntington Bancshares Incorpor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Huntington Bancshares 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 Huntington Bancshares. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Huntington Bancshares has no effect on the direction of Synovus Financial i.e., Synovus Financial and Huntington Bancshares go up and down completely randomly.

Pair Corralation between Synovus Financial and Huntington Bancshares

Considering the 90-day investment horizon Synovus Financial Corp is expected to generate 1.4 times more return on investment than Huntington Bancshares. However, Synovus Financial is 1.4 times more volatile than Huntington Bancshares Incorporated. It trades about 0.15 of its potential returns per unit of risk. Huntington Bancshares Incorporated is currently generating about 0.17 per unit of risk. If you would invest  4,458  in Synovus Financial Corp on September 2, 2024 and sell it today you would earn a total of  1,249  from holding Synovus Financial Corp or generate 28.02% return on investment over 90 days.

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

Synovus Financial Corp  vs.  Huntington Bancshares Incorpor

Synovus Financial Corp

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Synovus Financial Corp are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating basic indicators, Synovus Financial showed solid returns over the last few months and may actually be approaching a breakup point.

Huntington Bancshares

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Huntington Bancshares Incorporated are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Huntington Bancshares displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Synovus Financial and Huntington Bancshares

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

The idea behind Synovus Financial Corp and Huntington Bancshares Incorporated 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 Channel module to use Commodity Channel Index to analyze current equity momentum.