Correlation Between Fifth Third and Dow Jones
Can any of the company-specific risk be diversified away by investing in both Fifth Third and Dow Jones 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 Dow Jones 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 Dow Jones Industrial, you can compare the effects of market volatilities on Fifth Third and Dow Jones 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 Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fifth Third and Dow Jones.
Diversification Opportunities for Fifth Third and Dow Jones
0.91 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Fifth and Dow is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Fifth Third Bancorp and Dow Jones Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dow Jones Industrial 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 Dow Jones. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dow Jones Industrial has no effect on the direction of Fifth Third i.e., Fifth Third and Dow Jones go up and down completely randomly.
Pair Corralation between Fifth Third and Dow Jones
Assuming the 90 days horizon Fifth Third Bancorp is expected to generate 2.15 times more return on investment than Dow Jones. However, Fifth Third is 2.15 times more volatile than Dow Jones Industrial. It trades about 0.31 of its potential returns per unit of risk. Dow Jones Industrial is currently generating about 0.27 per unit of risk. If you would invest 4,004 in Fifth Third Bancorp on August 29, 2024 and sell it today you would earn a total of 592.00 from holding Fifth Third Bancorp or generate 14.79% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fifth Third Bancorp vs. Dow Jones Industrial
Performance |
| Timeline |
Fifth Third and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
Fifth Third Bancorp
Pair trading matchups for Fifth Third
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with Fifth Third and Dow Jones
The main advantage of trading using opposite Fifth Third and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fifth Third position performs unexpectedly, Dow Jones 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 Dow Jones will offset losses from the drop in Dow Jones' long position.| Fifth Third vs. ATRYS HEALTH SA | Fifth Third vs. Bausch Health Companies | Fifth Third vs. UPDATE SOFTWARE | Fifth Third vs. GUARDANT HEALTH CL |
| Dow Jones vs. CECO Environmental Corp | Dow Jones vs. Western Acquisition Ventures | Dow Jones vs. Tyson Foods | Dow Jones vs. Inflection Point Acquisition |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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