Correlation Between Prosperity Bancshares and Fifth Third
Can any of the company-specific risk be diversified away by investing in both Prosperity Bancshares 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 Prosperity Bancshares and Fifth Third into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Prosperity Bancshares and Fifth Third Bancorp, you can compare the effects of market volatilities on Prosperity Bancshares 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 Prosperity Bancshares with a short position of Fifth Third. Check out your portfolio center. Please also check ongoing floating volatility patterns of Prosperity Bancshares and Fifth Third.
Diversification Opportunities for Prosperity Bancshares and Fifth Third
0.94 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Prosperity and Fifth is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Prosperity Bancshares 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 Prosperity Bancshares 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 Prosperity Bancshares 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 Prosperity Bancshares i.e., Prosperity Bancshares and Fifth Third go up and down completely randomly.
Pair Corralation between Prosperity Bancshares and Fifth Third
Allowing for the 90-day total investment horizon Prosperity Bancshares is expected to under-perform the Fifth Third. But the stock apears to be less risky and, when comparing its historical volatility, Prosperity Bancshares is 1.04 times less risky than Fifth Third. The stock trades about -0.05 of its potential returns per unit of risk. The Fifth Third Bancorp is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest 4,434 in Fifth Third Bancorp on November 18, 2024 and sell it today you would lose (28.00) from holding Fifth Third Bancorp or give up 0.63% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Prosperity Bancshares vs. Fifth Third Bancorp
Performance |
| Timeline |
| Prosperity Bancshares |
| Fifth Third Bancorp |
Prosperity Bancshares and Fifth Third Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Prosperity Bancshares and Fifth Third
The main advantage of trading using opposite Prosperity Bancshares and Fifth Third positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Prosperity Bancshares 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.| Prosperity Bancshares vs. Heritage Commerce Corp | Prosperity Bancshares vs. Business First Bancshares | Prosperity Bancshares vs. German American Bancorp | Prosperity Bancshares vs. Texas Capital Bancshares |
| 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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