Correlation Between Fifth Third and Cathay General
Can any of the company-specific risk be diversified away by investing in both Fifth Third and Cathay General 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 Cathay General 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 Cathay General Bancorp, you can compare the effects of market volatilities on Fifth Third and Cathay General 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 Cathay General. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fifth Third and Cathay General.
Diversification Opportunities for Fifth Third and Cathay General
0.96 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Fifth and Cathay is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding Fifth Third Bancorp and Cathay General Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cathay General 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 Cathay General. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cathay General Bancorp has no effect on the direction of Fifth Third i.e., Fifth Third and Cathay General go up and down completely randomly.
Pair Corralation between Fifth Third and Cathay General
Given the investment horizon of 90 days Fifth Third Bancorp is expected to generate 0.91 times more return on investment than Cathay General. However, Fifth Third Bancorp is 1.1 times less risky than Cathay General. It trades about 0.1 of its potential returns per unit of risk. Cathay General Bancorp is currently generating about 0.07 per unit of risk. If you would invest 2,527 in Fifth Third Bancorp on August 31, 2024 and sell it today you would earn a total of 2,279 from holding Fifth Third Bancorp or generate 90.19% 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. Cathay General Bancorp
Performance |
| Timeline |
| Fifth Third Bancorp |
| Cathay General Bancorp |
Fifth Third and Cathay General Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fifth Third and Cathay General
The main advantage of trading using opposite Fifth Third and Cathay General positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fifth Third position performs unexpectedly, Cathay General 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 Cathay General will offset losses from the drop in Cathay General's long position.| Fifth Third vs. KeyCorp | Fifth Third vs. Regions Financial | Fifth Third vs. Zions Bancorporation | Fifth Third vs. Huntington Bancshares Incorporated |
| Cathay General vs. Glacier Bancorp | Cathay General vs. Capitol Federal Financial | Cathay General vs. Byline Bancorp | Cathay General vs. First Financial Bankshares |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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