Correlation Between Alkermes Plc and Fifth Third

Can any of the company-specific risk be diversified away by investing in both Alkermes Plc 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 Alkermes Plc and Fifth Third into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Alkermes Plc and Fifth Third Bancorp, you can compare the effects of market volatilities on Alkermes Plc 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 Alkermes Plc with a short position of Fifth Third. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alkermes Plc and Fifth Third.

Diversification Opportunities for Alkermes Plc and Fifth Third

-0.25

Correlation Coefficient

Alkermes Plc  Fifth Third

Very good diversification

The 3 months correlation between Alkermes and Fifth is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding Alkermes Plc 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 Alkermes Plc 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 Alkermes Plc 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 Alkermes Plc i.e., Alkermes Plc and Fifth Third go up and down completely randomly.

Pair Corralation between Alkermes Plc and Fifth Third

Given the investment horizon of 90 days Alkermes Plc is expected to under-perform the Fifth Third. But the stock apears to be less risky and, when comparing its historical volatility, Alkermes Plc is 1.18 times less risky than Fifth Third. The stock trades about -0.22 of its potential returns per unit of risk. The Fifth Third Bancorp is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  3,568  in Fifth Third Bancorp on January 26, 2024 and sell it today you would earn a total of  155.00  from holding Fifth Third Bancorp or generate 4.34% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Alkermes Plc  vs.  Fifth Third Bancorp

Alkermes Plc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Alkermes Plc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest inconsistent performance, the Stock's forward-looking signals remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Fifth Third Bancorp

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Fifth Third Bancorp are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Fifth Third may actually be approaching a critical reversion point that can send shares even higher in May 2024.

Pair Trading with Alkermes Plc and Fifth Third

The main advantage of trading using opposite Alkermes Plc and Fifth Third positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alkermes Plc 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.

The idea behind Alkermes Plc and Fifth Third Bancorp 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.

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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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.