Correlation Between Fifth Third and Woori Financial

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

Diversification Opportunities for Fifth Third and Woori Financial

0.5

Correlation Coefficient

Fifth Third  Woori Financial

Very weak diversification

The 3 months correlation between Fifth and Woori is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Fifth Third Bancorp and Woori Financial Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Woori Financial Group 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 Woori Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Woori Financial Group has no effect on the direction of Fifth Third i.e., Fifth Third and Woori Financial go up and down completely randomly.

Pair Corralation between Fifth Third and Woori Financial

Given the investment horizon of 90 days Fifth Third Bancorp is expected to generate 1.21 times more return on investment than Woori Financial. However, Fifth Third is 1.21 times more volatile than Woori Financial Group. It trades about 0.02 of its potential returns per unit of risk. Woori Financial Group is currently generating about 0.02 per unit of risk. If you would invest  3,479  in Fifth Third Bancorp on January 25, 2024 and sell it today you would earn a total of  227.00  from holding Fifth Third Bancorp or generate 6.52% return on investment over 90 days.

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

Fifth Third Bancorp  vs.  Woori Financial Group

Fifth Third Bancorp

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Fifth Third Bancorp are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat fragile basic indicators, Fifth Third may actually be approaching a critical reversion point that can send shares even higher in May 2024.

Woori Financial Group

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Woori Financial Group are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile technical and fundamental indicators, Woori Financial reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Fifth Third and Woori Financial

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

The idea behind Fifth Third Bancorp and Woori Financial Group 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.