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 National 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
0.93 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between First and Fifth is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding First Horizon National 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 National 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
Considering the 90-day investment horizon First Horizon National is expected to generate 1.53 times more return on investment than Fifth Third. However, First Horizon is 1.53 times more volatile than Fifth Third Bancorp. It trades about 0.1 of its potential returns per unit of risk. Fifth Third Bancorp is currently generating about 0.15 per unit of risk. If you would invest 1,537 in First Horizon National on August 24, 2024 and sell it today you would earn a total of 480.00 from holding First Horizon National or generate 31.23% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
First Horizon National vs. Fifth Third Bancorp
Performance |
| Timeline |
| First Horizon National |
| 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. Zions Bancorporation | First Horizon vs. KeyCorp | First Horizon vs. Comerica | First Horizon vs. Western Alliance Bancorporation |
| 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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