Correlation Between Fifth Third and Bank of New York
Can any of the company-specific risk be diversified away by investing in both Fifth Third and Bank of New York 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 Fifth Third and Bank of New York into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fifth Third Bancorp and Bank of New, you can compare the effects of market volatilities on Fifth Third and Bank of New York 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 Fifth Third with a short position of Bank of New York. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fifth Third and Bank of New York.
Diversification Opportunities for Fifth Third and Bank of New York
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Fifth and Bank is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Fifth Third Bancorp and Bank of New in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bank of New York and Fifth Third 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 Fifth Third Bancorp are associated (or correlated) with Bank of New York. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bank of New York has no effect on the direction of Fifth Third i.e., Fifth Third and Bank of New York go up and down completely randomly.
Pair Corralation between Fifth Third and Bank of New York
Given the investment horizon of 90 days Fifth Third is expected to generate 2.66 times less return on investment than Bank of New York. In addition to that, Fifth Third is 1.44 times more volatile than Bank of New. It trades about 0.01 of its total potential returns per unit of risk. Bank of New is currently generating about 0.05 per unit of volatility. If you would invest 4,215 in Bank of New on January 24, 2024 and sell it today you would earn a total of 1,501 from holding Bank of New or generate 35.61% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.8% |
| Values | Daily Returns |
Fifth Third Bancorp vs. Bank of New
Performance |
| Timeline |
| Fifth Third Bancorp |
| Bank of New York |
Fifth Third and Bank of New York Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fifth Third and Bank of New York
The main advantage of trading using opposite Fifth Third and Bank of New York positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fifth Third position performs unexpectedly, Bank of New York 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 Bank of New York will offset losses from the drop in Bank of New York's long position.The idea behind Fifth Third Bancorp and Bank of New pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Bank of New York vs. Northern Trust | Bank of New York vs. Invesco Plc | Bank of New York vs. Franklin Resources | Bank of New York vs. T Rowe Price |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
Other Complementary Tools
| Stock Tickers Use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites | |
| Bollinger Bands Use Bollinger Bands indicator to analyze target price for a given investing horizon | |
| Stocks Directory Find actively traded stocks across global markets | |
| Watchlist Optimization Optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm | |
| Alpha Finder Use alpha and beta coefficients to find investment opportunities after accounting for the risk | |
| Funds Screener Find actively-traded funds from around the world traded on over 30 global exchanges | |
| Earnings Calls Check upcoming earnings announcements updated hourly across public exchanges | |
| Portfolio Dashboard Portfolio dashboard that provides centralized access to all your investments | |
| Pattern Recognition Use different Pattern Recognition models to time the market across multiple global exchanges |