Correlation Between Delta Air and Synovus Financial

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

By analyzing existing cross correlation between Delta Air Lines and Synovus Financial Corp, you can compare the effects of market volatilities on Delta Air and Synovus 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 Delta Air with a short position of Synovus Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Delta Air and Synovus Financial.

Diversification Opportunities for Delta Air and Synovus Financial

0.96

Correlation Coefficient

Delta Air  Synovus Financial

Almost no diversification

The 3 months correlation between Delta and Synovus is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding Delta Air Lines and Synovus Financial Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Synovus Financial Corp and Delta Air 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 Delta Air Lines are associated (or correlated) with Synovus Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Synovus Financial Corp has no effect on the direction of Delta Air i.e., Delta Air and Synovus Financial go up and down completely randomly.

Pair Corralation between Delta Air and Synovus Financial

Assuming the 90 days horizon Delta Air is expected to generate 1.05 times less return on investment than Synovus Financial. In addition to that, Delta Air is 1.05 times more volatile than Synovus Financial Corp. It trades about 0.17 of its total potential returns per unit of risk. Synovus Financial Corp is currently generating about 0.19 per unit of volatility. If you would invest  3,891  in Synovus Financial Corp on October 8, 2024 and sell it today you would earn a total of  1,089  from holding Synovus Financial Corp or generate 27.99% return on investment over 90 days.

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

Delta Air Lines  vs.  Synovus Financial Corp

Delta Air Lines

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Delta Air Lines are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Delta Air reported solid returns over the last few months and may actually be approaching a breakup point.

Synovus Financial Corp

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Synovus Financial Corp are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Synovus Financial unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Delta Air and Synovus Financial

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

The idea behind Delta Air Lines and Synovus Financial 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.