Correlation Between Fifth Third and Regions Financial
Can any of the company-specific risk be diversified away by investing in both Fifth Third and Regions 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 Regions 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 Regions Financial, you can compare the effects of market volatilities on Fifth Third and Regions 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 Regions Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fifth Third and Regions Financial.
Diversification Opportunities for Fifth Third and Regions Financial
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Fifth and Regions is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Fifth Third Bancorp and Regions Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Regions 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 Regions Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Regions Financial has no effect on the direction of Fifth Third i.e., Fifth Third and Regions Financial go up and down completely randomly.
Pair Corralation between Fifth Third and Regions Financial
Assuming the 90 days horizon Fifth Third Bancorp is expected to generate 0.74 times more return on investment than Regions Financial. However, Fifth Third Bancorp is 1.35 times less risky than Regions Financial. It trades about 0.06 of its potential returns per unit of risk. Regions Financial is currently generating about 0.03 per unit of risk. If you would invest 2,327 in Fifth Third Bancorp on September 3, 2024 and sell it today you would earn a total of 24.00 from holding Fifth Third Bancorp or generate 1.03% 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. Regions Financial
Performance |
| Timeline |
| Fifth Third Bancorp |
| Regions Financial |
Fifth Third and Regions Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fifth Third and Regions Financial
The main advantage of trading using opposite Fifth Third and Regions Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fifth Third position performs unexpectedly, Regions 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 Regions Financial will offset losses from the drop in Regions 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 |
| Regions Financial vs. PennantPark Floating Rate | Regions Financial vs. Cadence Design Systems | Regions Financial vs. Kaltura | Regions Financial vs. RadNet Inc |
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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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