Correlation Between Fifth Third and Citizens Financial
Can any of the company-specific risk be diversified away by investing in both Fifth Third and Citizens 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 Fifth Third and Citizens Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fifth Third Bancorp and Citizens Financial Group, you can compare the effects of market volatilities on Fifth Third and Citizens 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 Fifth Third with a short position of Citizens Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fifth Third and Citizens Financial.
Diversification Opportunities for Fifth Third and Citizens Financial
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Fifth and Citizens is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Fifth Third Bancorp and Citizens Financial Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Citizens Financial and Fifth Third 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 Fifth Third Bancorp are associated (or correlated) with Citizens Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Citizens Financial has no effect on the direction of Fifth Third i.e., Fifth Third and Citizens Financial go up and down completely randomly.
Pair Corralation between Fifth Third and Citizens Financial
Assuming the 90 days horizon Fifth Third is expected to generate 1.12 times less return on investment than Citizens Financial. In addition to that, Fifth Third is 1.13 times more volatile than Citizens Financial Group. It trades about 0.12 of its total potential returns per unit of risk. Citizens Financial Group is currently generating about 0.15 per unit of volatility. If you would invest 3,179 in Citizens Financial Group on August 25, 2024 and sell it today you would earn a total of 1,264 from holding Citizens Financial Group or generate 39.76% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fifth Third Bancorp vs. Citizens Financial Group
Performance |
| Timeline |
| Fifth Third Bancorp |
| Citizens Financial |
Fifth Third and Citizens Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fifth Third and Citizens Financial
The main advantage of trading using opposite Fifth Third and Citizens Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fifth Third position performs unexpectedly, Citizens 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 Citizens Financial will offset losses from the drop in Citizens Financial's long position.| Fifth Third vs. Regions Financial | Fifth Third vs. Superior Plus Corp | Fifth Third vs. NMI Holdings | Fifth Third vs. Origin Agritech |
| Citizens Financial vs. Regions Financial | Citizens Financial vs. Superior Plus Corp | Citizens Financial vs. NMI Holdings | Citizens Financial vs. Origin Agritech |
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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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