Correlation Between First Horizon and Fifth Third
Can any of the company-specific risk be diversified away by investing in both First Horizon 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 Horizon 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 Horizon and Fifth Third Bancorp, you can compare the effects of market volatilities on First Horizon 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 Horizon with a short position of Fifth Third. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Horizon and Fifth Third.
Diversification Opportunities for First Horizon and Fifth Third
-0.07 | Correlation Coefficient |
Good diversification
The 3 months correlation between First and Fifth is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding First Horizon 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 Horizon 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 Horizon 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 Horizon i.e., First Horizon and Fifth Third go up and down completely randomly.
Pair Corralation between First Horizon and Fifth Third
Assuming the 90 days trading horizon First Horizon is expected to under-perform the Fifth Third. In addition to that, First Horizon is 1.02 times more volatile than Fifth Third Bancorp. It trades about -0.23 of its total potential returns per unit of risk. Fifth Third Bancorp is currently generating about -0.03 per unit of volatility. If you would invest 2,346 in Fifth Third Bancorp on September 14, 2024 and sell it today you would lose (12.00) from holding Fifth Third Bancorp or give up 0.51% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
First Horizon vs. Fifth Third Bancorp
Performance |
| Timeline |
| First Horizon |
| Fifth Third Bancorp |
First Horizon and Fifth Third Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Horizon and Fifth Third
The main advantage of trading using opposite First Horizon and Fifth Third positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Horizon 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 Horizon vs. First Horizon | First Horizon vs. First Horizon | First Horizon vs. Citizens Financial Group | First Horizon vs. Customers Bancorp |
| Fifth Third vs. Fifth Third Bancorp | Fifth Third vs. Fifth Third Bancorp | Fifth Third vs. First Citizens BancShares | Fifth Third vs. Northern Trust |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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