Correlation Between Fortescue Metals and Fifth Third
Can any of the company-specific risk be diversified away by investing in both Fortescue Metals 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 Fortescue Metals and Fifth Third into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fortescue Metals Group and Fifth Third Bancorp, you can compare the effects of market volatilities on Fortescue Metals 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 Fortescue Metals with a short position of Fifth Third. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fortescue Metals and Fifth Third.
Diversification Opportunities for Fortescue Metals and Fifth Third
-0.36 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Fortescue and Fifth is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Fortescue Metals Group 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 Fortescue Metals 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 Fortescue Metals Group 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 Fortescue Metals i.e., Fortescue Metals and Fifth Third go up and down completely randomly.
Pair Corralation between Fortescue Metals and Fifth Third
Assuming the 90 days horizon Fortescue Metals is expected to generate 5.9 times less return on investment than Fifth Third. But when comparing it to its historical volatility, Fortescue Metals Group is 1.04 times less risky than Fifth Third. It trades about 0.01 of its potential returns per unit of risk. Fifth Third Bancorp is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 2,823 in Fifth Third Bancorp on October 11, 2024 and sell it today you would earn a total of 1,286 from holding Fifth Third Bancorp or generate 45.55% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fortescue Metals Group vs. Fifth Third Bancorp
Performance |
| Timeline |
| Fortescue Metals |
| Fifth Third Bancorp |
Fortescue Metals and Fifth Third Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fortescue Metals and Fifth Third
The main advantage of trading using opposite Fortescue Metals and Fifth Third positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fortescue Metals 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.| Fortescue Metals vs. Hanison Construction Holdings | Fortescue Metals vs. Australian Agricultural | Fortescue Metals vs. TYSON FOODS A | Fortescue Metals vs. CN MODERN DAIRY |
| Fifth Third vs. Fortescue Metals Group | Fifth Third vs. PARKEN Sport Entertainment | Fifth Third vs. Live Nation Entertainment | Fifth Third vs. PRECISION DRILLING P |
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 Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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