Correlation Between Fifth Third and Farmers Bancorp
Can any of the company-specific risk be diversified away by investing in both Fifth Third and Farmers Bancorp 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 Farmers Bancorp 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 Farmers Bancorp, you can compare the effects of market volatilities on Fifth Third and Farmers Bancorp 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 Farmers Bancorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fifth Third and Farmers Bancorp.
Diversification Opportunities for Fifth Third and Farmers Bancorp
-0.63 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Fifth and Farmers is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding Fifth Third Bancorp and Farmers Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Farmers Bancorp 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 Farmers Bancorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Farmers Bancorp has no effect on the direction of Fifth Third i.e., Fifth Third and Farmers Bancorp go up and down completely randomly.
Pair Corralation between Fifth Third and Farmers Bancorp
Assuming the 90 days horizon Fifth Third Bancorp is expected to generate 0.42 times more return on investment than Farmers Bancorp. However, Fifth Third Bancorp is 2.36 times less risky than Farmers Bancorp. It trades about 0.05 of its potential returns per unit of risk. Farmers Bancorp is currently generating about -0.02 per unit of risk. If you would invest 2,181 in Fifth Third Bancorp on September 2, 2024 and sell it today you would earn a total of 344.00 from holding Fifth Third Bancorp or generate 15.77% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Weak |
Accuracy | 64.25% |
Values | Daily Returns |
Fifth Third Bancorp vs. Farmers Bancorp
Performance |
Timeline |
Fifth Third Bancorp |
Farmers Bancorp |
Fifth Third and Farmers Bancorp Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Fifth Third and Farmers Bancorp
The main advantage of trading using opposite Fifth Third and Farmers Bancorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fifth Third position performs unexpectedly, Farmers Bancorp 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 Farmers Bancorp will offset losses from the drop in Farmers Bancorp's long position.Fifth Third vs. Fifth Third Bancorp | Fifth Third vs. Fifth Third Bancorp | Fifth Third vs. First Citizens BancShares | Fifth Third vs. Huntington Bancshares Incorporated |
Farmers Bancorp vs. First Farmers Financial | Farmers Bancorp vs. Farmers Merchants Bancorp | Farmers Bancorp vs. Lakeland Financial | Farmers Bancorp vs. Eagle Financial Services |
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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
Other Complementary Tools
Latest Portfolios Quick portfolio dashboard that showcases your latest portfolios | |
Positions Ratings Determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
Price Transformation Use Price Transformation models to analyze the depth of different equity instruments across global markets | |
Risk-Return Analysis View associations between returns expected from investment and the risk you assume | |
Portfolio Center All portfolio management and optimization tools to improve performance of your portfolios |