Correlation Between Citizens Financial and Fifth Third
Can any of the company-specific risk be diversified away by investing in both Citizens Financial and Fifth Third 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 Citizens Financial and Fifth Third into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Citizens Financial Group and Fifth Third Bancorp, you can compare the effects of market volatilities on Citizens Financial and Fifth Third 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 Citizens Financial with a short position of Fifth Third. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citizens Financial and Fifth Third.
Diversification Opportunities for Citizens Financial and Fifth Third
0.2 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Citizens and Fifth is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Citizens Financial Group and Fifth Third Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fifth Third Bancorp and Citizens 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 Citizens Financial Group are associated (or correlated) with Fifth Third. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fifth Third Bancorp has no effect on the direction of Citizens Financial i.e., Citizens Financial and Fifth Third go up and down completely randomly.
Pair Corralation between Citizens Financial and Fifth Third
Assuming the 90 days trading horizon Citizens Financial Group is expected to under-perform the Fifth Third. In addition to that, Citizens Financial is 3.68 times more volatile than Fifth Third Bancorp. It trades about -0.22 of its total potential returns per unit of risk. Fifth Third Bancorp is currently generating about -0.01 per unit of volatility. If you would invest 2,555 in Fifth Third Bancorp on August 27, 2024 and sell it today you would lose (1.00) from holding Fifth Third Bancorp or give up 0.04% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Citizens Financial Group vs. Fifth Third Bancorp
Performance |
| Timeline |
| Citizens Financial |
| Fifth Third Bancorp |
Citizens Financial and Fifth Third Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Citizens Financial and Fifth Third
The main advantage of trading using opposite Citizens Financial and Fifth Third positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citizens Financial position performs unexpectedly, Fifth Third 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 Fifth Third will offset losses from the drop in Fifth Third's long position.| Citizens Financial vs. Capital One Financial | Citizens Financial vs. Capital One Financial | Citizens Financial vs. Bank of America |
| Fifth Third vs. Capital One Financial | Fifth Third vs. Capital One Financial | Fifth Third vs. Bank of America |
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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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