Correlation Between Western Union and Synchrony Financial
Can any of the company-specific risk be diversified away by investing in both Western Union and Synchrony Financial 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 Western Union and Synchrony Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Western Union Co and Synchrony Financial, you can compare the effects of market volatilities on Western Union and Synchrony Financial 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 Western Union with a short position of Synchrony Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Western Union and Synchrony Financial.
Diversification Opportunities for Western Union and Synchrony Financial
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Western and Synchrony is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Western Union Co and Synchrony Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Synchrony Financial and Western Union 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 Western Union Co are associated (or correlated) with Synchrony Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Synchrony Financial has no effect on the direction of Western Union i.e., Western Union and Synchrony Financial go up and down completely randomly.
Pair Corralation between Western Union and Synchrony Financial
Allowing for the 90-day total investment horizon Western Union Co is expected to under-perform the Synchrony Financial. But the stock apears to be less risky and, when comparing its historical volatility, Western Union Co is 1.34 times less risky than Synchrony Financial. The stock trades about 0.0 of its potential returns per unit of risk. The Synchrony Financial is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 3,741 in Synchrony Financial on January 25, 2024 and sell it today you would earn a total of 545.00 from holding Synchrony Financial or generate 14.57% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Strong |
Accuracy | 100.0% |
Values | Daily Returns |
Western Union Co vs. Synchrony Financial
Performance |
Timeline |
Western Union |
Synchrony Financial |
Western Union and Synchrony Financial Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Western Union and Synchrony Financial
The main advantage of trading using opposite Western Union and Synchrony Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Western Union position performs unexpectedly, Synchrony Financial 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 Synchrony Financial will offset losses from the drop in Synchrony Financial's long position.Western Union vs. Navient Corp | Western Union vs. Green Dot | Western Union vs. Orix Corp Ads | Western Union vs. FirstCash |
Synchrony Financial vs. Visa Class A | Synchrony Financial vs. Mastercard | Synchrony Financial vs. Oshidori International Holdings | Synchrony Financial vs. US70082LAB36 |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
Other Complementary Tools
Portfolio Rebalancing Analyze risk-adjusted returns against different time horizons to find asset-allocation targets | |
Headlines Timeline Stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity | |
Portfolio Comparator Compare the composition, asset allocations and performance of any two portfolios in your account | |
Idea Breakdown Analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes | |
ETF Categories List of ETF categories grouped based on various criteria, such as the investment strategy or type of investments |