Correlation Between Fifth Third and Metropolitan Bank
Can any of the company-specific risk be diversified away by investing in both Fifth Third and Metropolitan Bank 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 Metropolitan Bank 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 Metropolitan Bank Holding, you can compare the effects of market volatilities on Fifth Third and Metropolitan Bank 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 Metropolitan Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fifth Third and Metropolitan Bank.
Diversification Opportunities for Fifth Third and Metropolitan Bank
0.97 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Fifth and Metropolitan is 0.97. Overlapping area represents the amount of risk that can be diversified away by holding Fifth Third Bancorp and Metropolitan Bank Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Metropolitan Bank Holding 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 Metropolitan Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Metropolitan Bank Holding has no effect on the direction of Fifth Third i.e., Fifth Third and Metropolitan Bank go up and down completely randomly.
Pair Corralation between Fifth Third and Metropolitan Bank
Given the investment horizon of 90 days Fifth Third is expected to generate 1.9 times less return on investment than Metropolitan Bank. But when comparing it to its historical volatility, Fifth Third Bancorp is 1.88 times less risky than Metropolitan Bank. It trades about 0.19 of its potential returns per unit of risk. Metropolitan Bank Holding is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest 5,548 in Metropolitan Bank Holding on August 31, 2024 and sell it today you would earn a total of 946.00 from holding Metropolitan Bank Holding or generate 17.05% 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. Metropolitan Bank Holding
Performance |
| Timeline |
| Fifth Third Bancorp |
| Metropolitan Bank Holding |
Fifth Third and Metropolitan Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fifth Third and Metropolitan Bank
The main advantage of trading using opposite Fifth Third and Metropolitan Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fifth Third position performs unexpectedly, Metropolitan Bank 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 Metropolitan Bank will offset losses from the drop in Metropolitan Bank's long position.| Fifth Third vs. KeyCorp | Fifth Third vs. Regions Financial | Fifth Third vs. Zions Bancorporation | Fifth Third vs. Huntington Bancshares Incorporated |
| Metropolitan Bank vs. Customers Bancorp | Metropolitan Bank vs. BayCom Corp | Metropolitan Bank vs. Capital Bancorp | Metropolitan Bank vs. Investar Holding 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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