Correlation Between Fifth Third and Village Bank
Can any of the company-specific risk be diversified away by investing in both Fifth Third and Village 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 Village 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 Village Bank and, you can compare the effects of market volatilities on Fifth Third and Village 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 Village Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fifth Third and Village Bank.
Diversification Opportunities for Fifth Third and Village Bank
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Fifth and Village is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Fifth Third Bancorp and Village Bank and in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Village 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 Village Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Village Bank has no effect on the direction of Fifth Third i.e., Fifth Third and Village Bank go up and down completely randomly.
Pair Corralation between Fifth Third and Village Bank
Given the investment horizon of 90 days Fifth Third Bancorp is expected to generate 4.93 times more return on investment than Village Bank. However, Fifth Third is 4.93 times more volatile than Village Bank and. It trades about 0.2 of its potential returns per unit of risk. Village Bank and is currently generating about 0.33 per unit of risk. If you would invest 4,401 in Fifth Third Bancorp on August 30, 2024 and sell it today you would earn a total of 415.00 from holding Fifth Third Bancorp or generate 9.43% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 56.52% |
| Values | Daily Returns |
Fifth Third Bancorp vs. Village Bank and
Performance |
| Timeline |
| Fifth Third Bancorp |
| Village Bank |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
OK
Fifth Third and Village Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fifth Third and Village Bank
The main advantage of trading using opposite Fifth Third and Village Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fifth Third position performs unexpectedly, Village 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 Village Bank will offset losses from the drop in Village Bank's long position.| Fifth Third vs. KeyCorp | Fifth Third vs. Regions Financial | Fifth Third vs. Zions Bancorporation | Fifth Third vs. Huntington Bancshares Incorporated |
| Village Bank vs. Prime Meridian Holding | Village Bank vs. William Penn Bancorp | Village Bank vs. Pathfinder Bancorp | Village Bank vs. Magyar Bancorp |
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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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