Correlation Between Fifth Third and CB Financial
Can any of the company-specific risk be diversified away by investing in both Fifth Third and CB Financial 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 CB Financial 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 CB Financial Services, you can compare the effects of market volatilities on Fifth Third and CB Financial 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 CB Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fifth Third and CB Financial.
Diversification Opportunities for Fifth Third and CB Financial
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Fifth and CBFV is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Fifth Third Bancorp and CB Financial Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CB Financial Services 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 CB Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CB Financial Services has no effect on the direction of Fifth Third i.e., Fifth Third and CB Financial go up and down completely randomly.
Pair Corralation between Fifth Third and CB Financial
Given the investment horizon of 90 days Fifth Third Bancorp is expected to generate 0.97 times more return on investment than CB Financial. However, Fifth Third Bancorp is 1.03 times less risky than CB Financial. It trades about 0.14 of its potential returns per unit of risk. CB Financial Services is currently generating about 0.09 per unit of risk. If you would invest 2,734 in Fifth Third Bancorp on August 25, 2024 and sell it today you would earn a total of 2,056 from holding Fifth Third Bancorp or generate 75.2% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.2% |
| Values | Daily Returns |
Fifth Third Bancorp vs. CB Financial Services
Performance |
| Timeline |
| Fifth Third Bancorp |
| CB Financial Services |
Fifth Third and CB Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fifth Third and CB Financial
The main advantage of trading using opposite Fifth Third and CB Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fifth Third position performs unexpectedly, CB Financial 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 CB Financial will offset losses from the drop in CB Financial's long position.| Fifth Third vs. KeyCorp | Fifth Third vs. Regions Financial | Fifth Third vs. Zions Bancorporation | Fifth Third vs. Huntington Bancshares Incorporated |
| CB Financial vs. Fifth Third Bancorp | CB Financial vs. Zions Bancorporation | CB Financial vs. Huntington Bancshares Incorporated | CB Financial vs. PNC Financial Services |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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