Correlation Between Synchrony Financial and Capital Drilling

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

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

Diversification Opportunities for Synchrony Financial and Capital Drilling

0.88

Correlation Coefficient

Synchrony Financial  Capital Drilling

Very poor diversification

The 3 months correlation between Synchrony and Capital is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Synchrony Financial and Capital Drilling in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Capital Drilling 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 Capital Drilling. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Capital Drilling has no effect on the direction of Synchrony Financial i.e., Synchrony Financial and Capital Drilling go up and down completely randomly.

Pair Corralation between Synchrony Financial and Capital Drilling

Assuming the 90 days trading horizon Synchrony Financial is expected to generate 0.93 times more return on investment than Capital Drilling. However, Synchrony Financial is 1.08 times less risky than Capital Drilling. It trades about 0.3 of its potential returns per unit of risk. Capital Drilling is currently generating about 0.22 per unit of risk. If you would invest  4,805  in Synchrony Financial on April 20, 2025 and sell it today you would earn a total of  2,141  from holding Synchrony Financial or generate 44.56% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	96.77%
Values	Daily Returns

Synchrony Financial  vs.  Capital Drilling

Synchrony Financial

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Synchrony Financial are ranked lower than 23 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Synchrony Financial unveiled solid returns over the last few months and may actually be approaching a breakup point.

Capital Drilling

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Capital Drilling are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Capital Drilling unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Synchrony Financial and Capital Drilling

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

The idea behind Synchrony Financial and Capital Drilling 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..