Correlation Between First Community and Fifth Third
Can any of the company-specific risk be diversified away by investing in both First Community 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 First Community and Fifth Third into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between First Community Bancshares and Fifth Third Bancorp, you can compare the effects of market volatilities on First Community 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 First Community with a short position of Fifth Third. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Community and Fifth Third.
Diversification Opportunities for First Community and Fifth Third
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between First and Fifth is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding First Community Bancshares 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 First Community 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 First Community Bancshares 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 First Community i.e., First Community and Fifth Third go up and down completely randomly.
Pair Corralation between First Community and Fifth Third
Given the investment horizon of 90 days First Community Bancshares is expected to generate 1.83 times more return on investment than Fifth Third. However, First Community is 1.83 times more volatile than Fifth Third Bancorp. It trades about 0.14 of its potential returns per unit of risk. Fifth Third Bancorp is currently generating about 0.21 per unit of risk. If you would invest 4,226 in First Community Bancshares on August 30, 2024 and sell it today you would earn a total of 438.00 from holding First Community Bancshares or generate 10.36% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
First Community Bancshares vs. Fifth Third Bancorp
Performance |
| Timeline |
| First Community Banc |
| Fifth Third Bancorp |
First Community and Fifth Third Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Community and Fifth Third
The main advantage of trading using opposite First Community and Fifth Third positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Community 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.| First Community vs. Dana Inc | First Community vs. Jutal Offshore Oil | First Community vs. SBM Offshore NV | First Community vs. Marine Products |
| Fifth Third vs. KeyCorp | Fifth Third vs. Regions Financial | Fifth Third vs. Zions Bancorporation | Fifth Third vs. Huntington Bancshares Incorporated |
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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
Other Complementary Tools
| Cryptocurrency Center Build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency | |
| Portfolio Suggestion Get suggestions outside of your existing asset allocation including your own model portfolios | |
| Financial Widgets Easily integrated Macroaxis content with over 30 different plug-and-play financial widgets | |
| Companies Directory Evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals | |
| Idea Breakdown Analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes |