Correlation Between Fifth Third and First Guaranty
Can any of the company-specific risk be diversified away by investing in both Fifth Third and First Guaranty 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 First Guaranty 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 First Guaranty Bancshares, you can compare the effects of market volatilities on Fifth Third and First Guaranty 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 First Guaranty. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fifth Third and First Guaranty.
Diversification Opportunities for Fifth Third and First Guaranty
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Fifth and First is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Fifth Third Bancorp and First Guaranty Bancshares in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Guaranty Bancshares 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 First Guaranty. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Guaranty Bancshares has no effect on the direction of Fifth Third i.e., Fifth Third and First Guaranty go up and down completely randomly.
Pair Corralation between Fifth Third and First Guaranty
Given the investment horizon of 90 days Fifth Third is expected to generate 2.88 times less return on investment than First Guaranty. In addition to that, Fifth Third is 1.02 times more volatile than First Guaranty Bancshares. It trades about 0.22 of its total potential returns per unit of risk. First Guaranty Bancshares is currently generating about 0.66 per unit of volatility. If you would invest 1,012 in First Guaranty Bancshares on August 28, 2024 and sell it today you would earn a total of 328.00 from holding First Guaranty Bancshares or generate 32.41% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fifth Third Bancorp vs. First Guaranty Bancshares
Performance |
| Timeline |
| Fifth Third Bancorp |
| First Guaranty Bancshares |
Fifth Third and First Guaranty Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fifth Third and First Guaranty
The main advantage of trading using opposite Fifth Third and First Guaranty positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fifth Third position performs unexpectedly, First Guaranty 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 First Guaranty will offset losses from the drop in First Guaranty's long position.| Fifth Third vs. KeyCorp | Fifth Third vs. Regions Financial | Fifth Third vs. Zions Bancorporation | Fifth Third vs. Huntington Bancshares Incorporated |
| First Guaranty vs. Fifth Third Bancorp | First Guaranty vs. Zions Bancorporation | First Guaranty vs. Huntington Bancshares Incorporated | First Guaranty 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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