Correlation Between Fifth Third and First Citizens
Can any of the company-specific risk be diversified away by investing in both Fifth Third and First Citizens 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 First Citizens 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 First Citizens BancShares, you can compare the effects of market volatilities on Fifth Third and First Citizens 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 First Citizens. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fifth Third and First Citizens.
Diversification Opportunities for Fifth Third and First Citizens
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Fifth and First is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Fifth Third Bancorp and First Citizens BancShares in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Citizens BancShares 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 First Citizens. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Citizens BancShares has no effect on the direction of Fifth Third i.e., Fifth Third and First Citizens go up and down completely randomly.
Pair Corralation between Fifth Third and First Citizens
Assuming the 90 days horizon Fifth Third is expected to generate 2.01 times less return on investment than First Citizens. But when comparing it to its historical volatility, Fifth Third Bancorp is 1.31 times less risky than First Citizens. It trades about 0.04 of its potential returns per unit of risk. First Citizens BancShares is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 1,864 in First Citizens BancShares on August 28, 2024 and sell it today you would earn a total of 482.00 from holding First Citizens BancShares or generate 25.86% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fifth Third Bancorp vs. First Citizens BancShares
Performance |
| Timeline |
| Fifth Third Bancorp |
| First Citizens BancShares |
Fifth Third and First Citizens Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fifth Third and First Citizens
The main advantage of trading using opposite Fifth Third and First Citizens positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fifth Third position performs unexpectedly, First Citizens 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 First Citizens will offset losses from the drop in First Citizens' 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 |
| First Citizens vs. Fifth Third Bancorp | First Citizens vs. Dime Community Bancshares | First Citizens vs. Fifth Third Bancorp | First Citizens vs. Northern Trust |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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