Correlation Between TriCo Bancshares and Fifth Third
Can any of the company-specific risk be diversified away by investing in both TriCo 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 TriCo 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 TriCo Bancshares and Fifth Third Bancorp, you can compare the effects of market volatilities on TriCo 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 TriCo Bancshares with a short position of Fifth Third. Check out your portfolio center. Please also check ongoing floating volatility patterns of TriCo Bancshares and Fifth Third.
Diversification Opportunities for TriCo Bancshares and Fifth Third
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between TriCo and Fifth is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding TriCo 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 TriCo 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 TriCo 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 TriCo Bancshares i.e., TriCo Bancshares and Fifth Third go up and down completely randomly.
Pair Corralation between TriCo Bancshares and Fifth Third
Given the investment horizon of 90 days TriCo Bancshares is expected to generate 1.91 times less return on investment than Fifth Third. In addition to that, TriCo Bancshares is 1.28 times more volatile than Fifth Third Bancorp. It trades about 0.04 of its total potential returns per unit of risk. Fifth Third Bancorp is currently generating about 0.1 per unit of volatility. If you would invest 2,527 in Fifth Third Bancorp on August 31, 2024 and sell it today you would earn a total of 2,279 from holding Fifth Third Bancorp or generate 90.19% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
TriCo Bancshares vs. Fifth Third Bancorp
Performance |
| Timeline |
| TriCo Bancshares |
| Fifth Third Bancorp |
TriCo Bancshares and Fifth Third Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with TriCo Bancshares and Fifth Third
The main advantage of trading using opposite TriCo Bancshares and Fifth Third positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TriCo 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.| TriCo Bancshares vs. First Northwest Bancorp | TriCo Bancshares vs. Community West Bancshares | TriCo Bancshares vs. First Financial Northwest | TriCo Bancshares vs. Great Southern Bancorp |
| 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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