Correlation Between SolarWinds Corp and Synchronoss Technologies

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

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

Diversification Opportunities for SolarWinds Corp and Synchronoss Technologies

-0.52

Correlation Coefficient

SolarWinds Corp  Synchronoss Technologies

Excellent diversification

The 3 months correlation between SolarWinds and Synchronoss is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding SolarWinds Corp and Synchronoss Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Synchronoss Technologies and SolarWinds Corp 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 SolarWinds Corp are associated (or correlated) with Synchronoss Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Synchronoss Technologies has no effect on the direction of SolarWinds Corp i.e., SolarWinds Corp and Synchronoss Technologies go up and down completely randomly.

Pair Corralation between SolarWinds Corp and Synchronoss Technologies

Considering the 90-day investment horizon SolarWinds Corp is expected to generate 0.45 times more return on investment than Synchronoss Technologies. However, SolarWinds Corp is 2.21 times less risky than Synchronoss Technologies. It trades about 0.1 of its potential returns per unit of risk. Synchronoss Technologies is currently generating about -0.18 per unit of risk. If you would invest  1,305  in SolarWinds Corp on September 28, 2024 and sell it today you would earn a total of  139.00  from holding SolarWinds Corp or generate 10.65% return on investment over 90 days.

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

SolarWinds Corp  vs.  Synchronoss Technologies

SolarWinds Corp

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in SolarWinds Corp are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite fairly uncertain basic indicators, SolarWinds Corp may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Synchronoss Technologies

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Synchronoss Technologies has generated negative risk-adjusted returns adding no value to investors with long positions. Even with weak performance in the last few months, the Stock's fundamental indicators remain relatively invariable which may send shares a bit higher in January 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with SolarWinds Corp and Synchronoss Technologies

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

The idea behind SolarWinds Corp and Synchronoss Technologies 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.