Correlation Between Synchrony Financial and TLGY Acquisition

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

By analyzing existing cross correlation between Synchrony Financial and TLGY Acquisition Corp, you can compare the effects of market volatilities on Synchrony Financial and TLGY Acquisition 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 TLGY Acquisition. Check out your portfolio center. Please also check ongoing floating volatility patterns of Synchrony Financial and TLGY Acquisition.

Diversification Opportunities for Synchrony Financial and TLGY Acquisition

0.93

Correlation Coefficient

Synchrony Financial  TLGY Acquisition

Almost no diversification

The 3 months correlation between Synchrony and TLGY is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Synchrony Financial and TLGY Acquisition Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TLGY Acquisition Corp 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 TLGY Acquisition. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TLGY Acquisition Corp has no effect on the direction of Synchrony Financial i.e., Synchrony Financial and TLGY Acquisition go up and down completely randomly.

Pair Corralation between Synchrony Financial and TLGY Acquisition

Considering the 90-day investment horizon Synchrony Financial is expected to generate 39.71 times more return on investment than TLGY Acquisition. However, Synchrony Financial is 39.71 times more volatile than TLGY Acquisition Corp. It trades about 0.19 of its potential returns per unit of risk. TLGY Acquisition Corp is currently generating about 0.24 per unit of risk. If you would invest  4,897  in Synchrony Financial on September 17, 2024 and sell it today you would earn a total of  1,909  from holding Synchrony Financial or generate 38.98% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	98.46%
Values	Daily Returns

Synchrony Financial  vs.  TLGY Acquisition Corp

Synchrony Financial

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Synchrony Financial are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite nearly abnormal basic indicators, Synchrony Financial reported solid returns over the last few months and may actually be approaching a breakup point.

TLGY Acquisition Corp

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in TLGY Acquisition Corp are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong technical and fundamental indicators, TLGY Acquisition is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Synchrony Financial and TLGY Acquisition

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

The idea behind Synchrony Financial and TLGY Acquisition Corp 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.