Correlation Between Fifth Third and Lumbee Guaranty
Can any of the company-specific risk be diversified away by investing in both Fifth Third and Lumbee 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 Lumbee 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 Lumbee Guaranty Bank, you can compare the effects of market volatilities on Fifth Third and Lumbee 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 Lumbee Guaranty. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fifth Third and Lumbee Guaranty.
Diversification Opportunities for Fifth Third and Lumbee Guaranty
-0.57 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Fifth and Lumbee is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding Fifth Third Bancorp and Lumbee Guaranty Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lumbee Guaranty Bank 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 Lumbee Guaranty. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lumbee Guaranty Bank has no effect on the direction of Fifth Third i.e., Fifth Third and Lumbee Guaranty go up and down completely randomly.
Pair Corralation between Fifth Third and Lumbee Guaranty
Given the investment horizon of 90 days Fifth Third Bancorp is expected to generate 0.93 times more return on investment than Lumbee Guaranty. However, Fifth Third Bancorp is 1.08 times less risky than Lumbee Guaranty. It trades about 0.05 of its potential returns per unit of risk. Lumbee Guaranty Bank is currently generating about 0.01 per unit of risk. If you would invest 3,048 in Fifth Third Bancorp on September 2, 2024 and sell it today you would earn a total of 1,758 from holding Fifth Third Bancorp or generate 57.68% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fifth Third Bancorp vs. Lumbee Guaranty Bank
Performance |
| Timeline |
| Fifth Third Bancorp |
| Lumbee Guaranty Bank |
Fifth Third and Lumbee Guaranty Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fifth Third and Lumbee Guaranty
The main advantage of trading using opposite Fifth Third and Lumbee Guaranty positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fifth Third position performs unexpectedly, Lumbee 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 Lumbee Guaranty will offset losses from the drop in Lumbee Guaranty's long position.| Fifth Third vs. KeyCorp | Fifth Third vs. Regions Financial | Fifth Third vs. Zions Bancorporation | Fifth Third vs. Huntington Bancshares Incorporated |
| Lumbee Guaranty vs. Mission Valley Bancorp | Lumbee Guaranty vs. Nmb Financial Corp | Lumbee Guaranty vs. Japan Post Holdings | Lumbee Guaranty vs. MNB Holdings Corp |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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