Correlation Between Fifth Third and BCB Bancorp
Can any of the company-specific risk be diversified away by investing in both Fifth Third and BCB Bancorp 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 BCB Bancorp 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 BCB Bancorp, you can compare the effects of market volatilities on Fifth Third and BCB Bancorp 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 BCB Bancorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fifth Third and BCB Bancorp.
Diversification Opportunities for Fifth Third and BCB Bancorp
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Fifth and BCB is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Fifth Third Bancorp and BCB Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BCB Bancorp 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 BCB Bancorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BCB Bancorp has no effect on the direction of Fifth Third i.e., Fifth Third and BCB Bancorp go up and down completely randomly.
Pair Corralation between Fifth Third and BCB Bancorp
Given the investment horizon of 90 days Fifth Third is expected to generate 1.47 times less return on investment than BCB Bancorp. In addition to that, Fifth Third is 1.03 times more volatile than BCB Bancorp. It trades about 0.2 of its total potential returns per unit of risk. BCB Bancorp is currently generating about 0.3 per unit of volatility. If you would invest 1,191 in BCB Bancorp on August 27, 2024 and sell it today you would earn a total of 159.00 from holding BCB Bancorp or generate 13.35% 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. BCB Bancorp
Performance |
| Timeline |
| Fifth Third Bancorp |
| BCB Bancorp |
Fifth Third and BCB Bancorp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fifth Third and BCB Bancorp
The main advantage of trading using opposite Fifth Third and BCB Bancorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fifth Third position performs unexpectedly, BCB Bancorp 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 BCB Bancorp will offset losses from the drop in BCB Bancorp's long position.| Fifth Third vs. KeyCorp | Fifth Third vs. Regions Financial | Fifth Third vs. Zions Bancorporation | Fifth Third vs. Huntington Bancshares Incorporated |
| BCB Bancorp vs. Fifth Third Bancorp | BCB Bancorp vs. Zions Bancorporation | BCB Bancorp vs. Huntington Bancshares Incorporated | BCB Bancorp vs. Comerica |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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