Correlation Between Fifth Third and Citizens Financial
Can any of the company-specific risk be diversified away by investing in both Fifth Third and Citizens Financial 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 Citizens Financial 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 Citizens Financial Group, you can compare the effects of market volatilities on Fifth Third and Citizens Financial 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 Citizens Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fifth Third and Citizens Financial.
Diversification Opportunities for Fifth Third and Citizens Financial
-0.39 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Fifth and Citizens is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Fifth Third Bancorp and Citizens Financial Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Citizens Financial 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 Citizens Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Citizens Financial has no effect on the direction of Fifth Third i.e., Fifth Third and Citizens Financial go up and down completely randomly.
Pair Corralation between Fifth Third and Citizens Financial
Assuming the 90 days horizon Fifth Third Bancorp is expected to generate 0.58 times more return on investment than Citizens Financial. However, Fifth Third Bancorp is 1.73 times less risky than Citizens Financial. It trades about -0.03 of its potential returns per unit of risk. Citizens Financial Group is currently generating about -0.1 per unit of risk. If you would invest 2,346 in Fifth Third Bancorp on September 14, 2024 and sell it today you would lose (12.00) from holding Fifth Third Bancorp or give up 0.51% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fifth Third Bancorp vs. Citizens Financial Group
Performance |
| Timeline |
| Fifth Third Bancorp |
| Citizens Financial |
Fifth Third and Citizens Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fifth Third and Citizens Financial
The main advantage of trading using opposite Fifth Third and Citizens Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fifth Third position performs unexpectedly, Citizens Financial 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 Citizens Financial will offset losses from the drop in Citizens Financial's long position.| Fifth Third vs. Fifth Third Bancorp | Fifth Third vs. Fifth Third Bancorp | Fifth Third vs. First Citizens BancShares | Fifth Third vs. Northern Trust |
| Citizens Financial vs. Capital One Financial | Citizens Financial vs. Capital One Financial | Citizens Financial vs. Bank of America | Citizens Financial vs. KeyCorp |
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 Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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