Correlation Between 1st Capital and Fifth Third
Can any of the company-specific risk be diversified away by investing in both 1st Capital 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 1st Capital and Fifth Third into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between 1st Capital Bank and Fifth Third Bancorp, you can compare the effects of market volatilities on 1st Capital 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 1st Capital with a short position of Fifth Third. Check out your portfolio center. Please also check ongoing floating volatility patterns of 1st Capital and Fifth Third.
Diversification Opportunities for 1st Capital and Fifth Third
-0.4 | Correlation Coefficient |
Very good diversification
The 3 months correlation between 1st and Fifth is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding 1st Capital Bank 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 1st Capital 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 1st Capital Bank 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 1st Capital i.e., 1st Capital and Fifth Third go up and down completely randomly.
Pair Corralation between 1st Capital and Fifth Third
Given the investment horizon of 90 days 1st Capital Bank is expected to under-perform the Fifth Third. In addition to that, 1st Capital is 1.79 times more volatile than Fifth Third Bancorp. It trades about -0.25 of its total potential returns per unit of risk. Fifth Third Bancorp is currently generating about -0.05 per unit of volatility. If you would invest 2,541 in Fifth Third Bancorp on January 20, 2024 and sell it today you would lose (13.00) from holding Fifth Third Bancorp or give up 0.51% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
1st Capital Bank vs. Fifth Third Bancorp
Performance |
| Timeline |
| 1st Capital Bank |
| Fifth Third Bancorp |
1st Capital and Fifth Third Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with 1st Capital and Fifth Third
The main advantage of trading using opposite 1st Capital and Fifth Third positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if 1st Capital 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.| 1st Capital vs. Pacific Valley Bank | 1st Capital vs. Pinnacle Bank | 1st Capital vs. Santa Cruz County | 1st Capital vs. First Northern Community |
| Fifth Third vs. KeyCorp | Fifth Third vs. KeyCorp | Fifth Third vs. Regions Financial | Fifth Third vs. US Bancorp |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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