Correlation Between Fifth Third and First Hawaiian
Can any of the company-specific risk be diversified away by investing in both Fifth Third and First Hawaiian 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 Hawaiian 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 Hawaiian, you can compare the effects of market volatilities on Fifth Third and First Hawaiian 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 Hawaiian. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fifth Third and First Hawaiian.
Diversification Opportunities for Fifth Third and First Hawaiian
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Fifth and First is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Fifth Third Bancorp and First Hawaiian in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Hawaiian 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 Hawaiian. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Hawaiian has no effect on the direction of Fifth Third i.e., Fifth Third and First Hawaiian go up and down completely randomly.
Pair Corralation between Fifth Third and First Hawaiian
Given the investment horizon of 90 days Fifth Third Bancorp is expected to generate 1.4 times more return on investment than First Hawaiian. However, Fifth Third is 1.4 times more volatile than First Hawaiian. It trades about 0.14 of its potential returns per unit of risk. First Hawaiian is currently generating about 0.08 per unit of risk. If you would invest 4,253 in Fifth Third Bancorp on October 28, 2024 and sell it today you would earn a total of 165.00 from holding Fifth Third Bancorp or generate 3.88% 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 Hawaiian
Performance |
| Timeline |
| Fifth Third Bancorp |
| First Hawaiian |
Fifth Third and First Hawaiian Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fifth Third and First Hawaiian
The main advantage of trading using opposite Fifth Third and First Hawaiian positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fifth Third position performs unexpectedly, First Hawaiian 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 Hawaiian will offset losses from the drop in First Hawaiian's long position.| Fifth Third vs. KeyCorp | Fifth Third vs. Regions Financial | Fifth Third vs. Zions Bancorporation | Fifth Third vs. Huntington Bancshares Incorporated |
| First Hawaiian vs. Territorial Bancorp | First Hawaiian vs. Bank of Hawaii | First Hawaiian vs. Financial Institutions | First Hawaiian vs. Heritage Financial |
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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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