Correlation Between Synnex and Pitney Bowes

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

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

Diversification Opportunities for Synnex and Pitney Bowes

0.3

Correlation Coefficient

Synnex  Pitney Bowes

Weak diversification

The 3 months correlation between Synnex and Pitney is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding Synnex and Pitney Bowes in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pitney Bowes and Synnex 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 Synnex are associated (or correlated) with Pitney Bowes. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pitney Bowes has no effect on the direction of Synnex i.e., Synnex and Pitney Bowes go up and down completely randomly.

Pair Corralation between Synnex and Pitney Bowes

Considering the 90-day investment horizon Synnex is expected to generate 1.19 times less return on investment than Pitney Bowes. But when comparing it to its historical volatility, Synnex is 2.09 times less risky than Pitney Bowes. It trades about 0.03 of its potential returns per unit of risk. Pitney Bowes is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  431.00  in Pitney Bowes on January 26, 2024 and sell it today you would lose (7.00) from holding Pitney Bowes or give up 1.62% of portfolio value over 90 days.

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

Synnex  vs.  Pitney Bowes

Synnex

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Synnex are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of fairly uncertain basic indicators, Synnex may actually be approaching a critical reversion point that can send shares even higher in May 2024.

Pitney Bowes

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Pitney Bowes has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong fundamental drivers, Pitney Bowes is not utilizing all of its potentials. The latest stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Synnex and Pitney Bowes

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

The idea behind Synnex and Pitney Bowes 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.

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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.