Correlation Between Fifth Third and Meridian Bancorp

Can any of the company-specific risk be diversified away by investing in both Fifth Third and Meridian Bancorp 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 Meridian Bancorp 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 Meridian Bancorp, you can compare the effects of market volatilities on Fifth Third and Meridian Bancorp 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 Meridian Bancorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fifth Third and Meridian Bancorp.

Diversification Opportunities for Fifth Third and Meridian Bancorp

0.0

Correlation Coefficient

Fifth Third  Meridian Bancorp

Pay attention - limited upside

The 3 months correlation between Fifth and Meridian is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Fifth Third Bancorp and Meridian Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Meridian Bancorp 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 Meridian Bancorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Meridian Bancorp has no effect on the direction of Fifth Third i.e., Fifth Third and Meridian Bancorp go up and down completely randomly.

Pair Corralation between Fifth Third and Meridian Bancorp

If you would invest  3,436  in Fifth Third Bancorp on January 26, 2024 and sell it today you would earn a total of  270.00  from holding Fifth Third Bancorp or generate 7.86% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Fifth Third Bancorp  vs.  Meridian Bancorp

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.

Meridian Bancorp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Meridian Bancorp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Meridian Bancorp is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Fifth Third and Meridian Bancorp

The main advantage of trading using opposite Fifth Third and Meridian Bancorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fifth Third position performs unexpectedly, Meridian Bancorp 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 Meridian Bancorp will offset losses from the drop in Meridian Bancorp's long position.

The idea behind Fifth Third Bancorp and Meridian 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.