Correlation Between Synchrony Financial and Cardinal Health

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

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

Diversification Opportunities for Synchrony Financial and Cardinal Health

0.82

Correlation Coefficient

Synchrony Financial  Cardinal Health

Very poor diversification

The 3 months correlation between Synchrony and Cardinal is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Synchrony Financial and Cardinal Health in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cardinal Health 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 Cardinal Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cardinal Health has no effect on the direction of Synchrony Financial i.e., Synchrony Financial and Cardinal Health go up and down completely randomly.

Pair Corralation between Synchrony Financial and Cardinal Health

Assuming the 90 days horizon Synchrony Financial is expected to generate 1.54 times more return on investment than Cardinal Health. However, Synchrony Financial is 1.54 times more volatile than Cardinal Health. It trades about 0.25 of its potential returns per unit of risk. Cardinal Health is currently generating about 0.22 per unit of risk. If you would invest  4,187  in Synchrony Financial on April 20, 2025 and sell it today you would earn a total of  1,814  from holding Synchrony Financial or generate 43.32% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	98.44%
Values	Daily Returns

Synchrony Financial  vs.  Cardinal Health

Synchrony Financial

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Synchrony Financial are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Synchrony Financial reported solid returns over the last few months and may actually be approaching a breakup point.

Cardinal Health

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Cardinal Health are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Cardinal Health reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Synchrony Financial and Cardinal Health

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

The idea behind Synchrony Financial and Cardinal Health 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.