Correlation Between Fifth Third and Fulton Financial
Can any of the company-specific risk be diversified away by investing in both Fifth Third and Fulton 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 Fulton 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 Fulton Financial, you can compare the effects of market volatilities on Fifth Third and Fulton 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 Fulton Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fifth Third and Fulton Financial.
Diversification Opportunities for Fifth Third and Fulton Financial
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Fifth and Fulton is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Fifth Third Bancorp and Fulton Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fulton 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 Fulton Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fulton Financial has no effect on the direction of Fifth Third i.e., Fifth Third and Fulton Financial go up and down completely randomly.
Pair Corralation between Fifth Third and Fulton Financial
Assuming the 90 days horizon Fifth Third Bancorp is expected to generate 1.09 times more return on investment than Fulton Financial. However, Fifth Third is 1.09 times more volatile than Fulton Financial. It trades about 0.04 of its potential returns per unit of risk. Fulton Financial is currently generating about 0.03 per unit of risk. If you would invest 1,887 in Fifth Third Bancorp on August 28, 2024 and sell it today you would earn a total of 469.00 from holding Fifth Third Bancorp or generate 24.85% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fifth Third Bancorp vs. Fulton Financial
Performance |
| Timeline |
| Fifth Third Bancorp |
| Fulton Financial |
Fifth Third and Fulton Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fifth Third and Fulton Financial
The main advantage of trading using opposite Fifth Third and Fulton Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fifth Third position performs unexpectedly, Fulton 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 Fulton Financial will offset losses from the drop in Fulton Financial's long position.| Fifth Third vs. Capital One Financial | Fifth Third vs. Capital One Financial | Fifth Third vs. Bank of America |
| Fulton Financial vs. First Citizens BancShares | Fulton Financial vs. Fifth Third Bancorp | Fulton Financial vs. Dime Community Bancshares | Fulton Financial vs. Heartland Financial USA |
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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