Correlation Between PacWest Bancorp and Fifth Third
Can any of the company-specific risk be diversified away by investing in both PacWest Bancorp 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 PacWest Bancorp and Fifth Third into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PacWest Bancorp and Fifth Third Bancorp, you can compare the effects of market volatilities on PacWest Bancorp 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 PacWest Bancorp with a short position of Fifth Third. Check out your portfolio center. Please also check ongoing floating volatility patterns of PacWest Bancorp and Fifth Third.
Diversification Opportunities for PacWest Bancorp and Fifth Third
0.22 | Correlation Coefficient |
Modest diversification
The 3 months correlation between PacWest and Fifth is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding PacWest Bancorp 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 PacWest Bancorp 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 PacWest Bancorp 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 PacWest Bancorp i.e., PacWest Bancorp and Fifth Third go up and down completely randomly.
Pair Corralation between PacWest Bancorp and Fifth Third
If you would invest 3,601 in Fifth Third Bancorp on August 24, 2024 and sell it today you would earn a total of 1,111 from holding Fifth Third Bancorp or generate 30.85% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 0.8% |
| Values | Daily Returns |
PacWest Bancorp vs. Fifth Third Bancorp
Performance |
| Timeline |
| PacWest Bancorp |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Fifth Third Bancorp |
PacWest Bancorp and Fifth Third Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PacWest Bancorp and Fifth Third
The main advantage of trading using opposite PacWest Bancorp and Fifth Third positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PacWest Bancorp 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.| PacWest Bancorp vs. Zions Bancorporation | PacWest Bancorp vs. KeyCorp | PacWest Bancorp vs. Comerica | PacWest Bancorp vs. First Horizon National |
| Fifth Third vs. KeyCorp | Fifth Third vs. Regions Financial | Fifth Third vs. Zions Bancorporation | Fifth Third vs. Huntington Bancshares Incorporated |
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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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