Correlation Between Fulton Financial and Fifth Third
Can any of the company-specific risk be diversified away by investing in both Fulton Financial and Fifth Third 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 Fulton Financial and Fifth Third into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fulton Financial and Fifth Third Bancorp, you can compare the effects of market volatilities on Fulton Financial and Fifth Third 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 Fulton Financial with a short position of Fifth Third. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fulton Financial and Fifth Third.
Diversification Opportunities for Fulton Financial and Fifth Third
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Fulton and Fifth is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Fulton Financial and Fifth Third Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fifth Third Bancorp and Fulton Financial 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 Fulton Financial are associated (or correlated) with Fifth Third. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fifth Third Bancorp has no effect on the direction of Fulton Financial i.e., Fulton Financial and Fifth Third go up and down completely randomly.
Pair Corralation between Fulton Financial and Fifth Third
Assuming the 90 days horizon Fulton Financial is expected to generate 1.32 times less return on investment than Fifth Third. But when comparing it to its historical volatility, Fulton Financial is 1.09 times less risky than Fifth Third. It trades about 0.03 of its potential returns per unit of risk. Fifth Third Bancorp is currently generating about 0.04 of returns per unit of risk over similar time horizon. 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 |
Fulton Financial vs. Fifth Third Bancorp
Performance |
| Timeline |
| Fulton Financial |
| Fifth Third Bancorp |
Fulton Financial and Fifth Third Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fulton Financial and Fifth Third
The main advantage of trading using opposite Fulton Financial and Fifth Third positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fulton Financial position performs unexpectedly, Fifth Third 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 Fifth Third will offset losses from the drop in Fifth Third's long position.| Fulton Financial vs. First Citizens BancShares | Fulton Financial vs. Fifth Third Bancorp | Fulton Financial vs. Dime Community Bancshares | Fulton Financial vs. Heartland Financial USA |
| Fifth Third vs. Capital One Financial | Fifth Third vs. Capital One Financial | Fifth Third vs. Bank of America |
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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