Correlation Between Provident Financial and Fifth Third
Can any of the company-specific risk be diversified away by investing in both Provident 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 Provident 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 Provident Financial Services and Fifth Third Bancorp, you can compare the effects of market volatilities on Provident 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 Provident Financial with a short position of Fifth Third. Check out your portfolio center. Please also check ongoing floating volatility patterns of Provident Financial and Fifth Third.
Diversification Opportunities for Provident Financial and Fifth Third
0.93 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Provident and Fifth is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Provident Financial Services 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 Provident 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 Provident Financial Services 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 Provident Financial i.e., Provident Financial and Fifth Third go up and down completely randomly.
Pair Corralation between Provident Financial and Fifth Third
Considering the 90-day investment horizon Provident Financial Services is expected to generate 1.5 times more return on investment than Fifth Third. However, Provident Financial is 1.5 times more volatile than Fifth Third Bancorp. It trades about 0.1 of its potential returns per unit of risk. Fifth Third Bancorp is currently generating about 0.13 per unit of risk. If you would invest 1,448 in Provident Financial Services on August 27, 2024 and sell it today you would earn a total of 692.00 from holding Provident Financial Services or generate 47.79% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Provident Financial Services vs. Fifth Third Bancorp
Performance |
| Timeline |
| Provident Financial |
| Fifth Third Bancorp |
Provident Financial and Fifth Third Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Provident Financial and Fifth Third
The main advantage of trading using opposite Provident Financial and Fifth Third positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Provident 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.| Provident Financial vs. Fifth Third Bancorp | Provident Financial vs. Zions Bancorporation | Provident Financial vs. Huntington Bancshares Incorporated | Provident Financial vs. PNC Financial Services |
| 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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