Correlation Between Lake Shore and Fifth Third
Can any of the company-specific risk be diversified away by investing in both Lake Shore 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 Lake Shore and Fifth Third into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lake Shore Bancorp and Fifth Third Bancorp, you can compare the effects of market volatilities on Lake Shore 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 Lake Shore with a short position of Fifth Third. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lake Shore and Fifth Third.
Diversification Opportunities for Lake Shore and Fifth Third
-0.2 | Correlation Coefficient |
Good diversification
The 3 months correlation between Lake and Fifth is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding Lake Shore Bancorp 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 Lake Shore 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 Lake Shore Bancorp 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 Lake Shore i.e., Lake Shore and Fifth Third go up and down completely randomly.
Pair Corralation between Lake Shore and Fifth Third
Given the investment horizon of 90 days Lake Shore is expected to generate 1.57 times less return on investment than Fifth Third. In addition to that, Lake Shore is 1.11 times more volatile than Fifth Third Bancorp. It trades about 0.04 of its total potential returns per unit of risk. Fifth Third Bancorp is currently generating about 0.07 per unit of volatility. If you would invest 3,514 in Fifth Third Bancorp on February 2, 2024 and sell it today you would earn a total of 175.00 from holding Fifth Third Bancorp or generate 4.98% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Lake Shore Bancorp vs. Fifth Third Bancorp
Performance |
Timeline |
Lake Shore Bancorp |
Fifth Third Bancorp |
Lake Shore and Fifth Third Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Lake Shore and Fifth Third
The main advantage of trading using opposite Lake Shore and Fifth Third positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lake Shore 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.Lake Shore vs. National Bank Holdings | Lake Shore vs. Community West Bancshares | Lake Shore vs. First Capital | Lake Shore vs. Home Bancorp |
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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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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