Correlation Between Fifth Third and CullenFrost Bankers
Can any of the company-specific risk be diversified away by investing in both Fifth Third and CullenFrost Bankers 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 CullenFrost Bankers 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 CullenFrost Bankers, you can compare the effects of market volatilities on Fifth Third and CullenFrost Bankers 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 CullenFrost Bankers. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fifth Third and CullenFrost Bankers.
Diversification Opportunities for Fifth Third and CullenFrost Bankers
0.95 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Fifth and CullenFrost is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding Fifth Third Bancorp and CullenFrost Bankers in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CullenFrost Bankers 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 CullenFrost Bankers. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CullenFrost Bankers has no effect on the direction of Fifth Third i.e., Fifth Third and CullenFrost Bankers go up and down completely randomly.
Pair Corralation between Fifth Third and CullenFrost Bankers
Given the investment horizon of 90 days Fifth Third Bancorp is expected to generate 0.66 times more return on investment than CullenFrost Bankers. However, Fifth Third Bancorp is 1.52 times less risky than CullenFrost Bankers. It trades about 0.22 of its potential returns per unit of risk. CullenFrost Bankers is currently generating about 0.14 per unit of risk. If you would invest 4,405 in Fifth Third Bancorp on August 28, 2024 and sell it today you would earn a total of 439.00 from holding Fifth Third Bancorp or generate 9.97% 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. CullenFrost Bankers
Performance |
| Timeline |
| Fifth Third Bancorp |
| CullenFrost Bankers |
Fifth Third and CullenFrost Bankers Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fifth Third and CullenFrost Bankers
The main advantage of trading using opposite Fifth Third and CullenFrost Bankers positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fifth Third position performs unexpectedly, CullenFrost Bankers 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 CullenFrost Bankers will offset losses from the drop in CullenFrost Bankers' long position.| Fifth Third vs. KeyCorp | Fifth Third vs. Regions Financial | Fifth Third vs. Zions Bancorporation | Fifth Third vs. Huntington Bancshares Incorporated |
| CullenFrost Bankers vs. Fifth Third Bancorp | CullenFrost Bankers vs. Huntington Bancshares Incorporated | CullenFrost Bankers vs. MT Bank |
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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