Correlation Between Fifth Third and Equity Bancshares,

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

Diversification Opportunities for Fifth Third and Equity Bancshares,

0.93

Correlation Coefficient

Fifth Third  Equity Bancshares,

Almost no diversification

The 3 months correlation between Fifth and Equity is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Fifth Third Bancorp and Equity Bancshares, in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Equity Bancshares, 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 Equity Bancshares,. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Equity Bancshares, has no effect on the direction of Fifth Third i.e., Fifth Third and Equity Bancshares, go up and down completely randomly.

Pair Corralation between Fifth Third and Equity Bancshares,

Given the investment horizon of 90 days Fifth Third Bancorp is expected to under-perform the Equity Bancshares,. But the stock apears to be less risky and, when comparing its historical volatility, Fifth Third Bancorp is 1.1 times less risky than Equity Bancshares,. The stock trades about -0.07 of its potential returns per unit of risk. The Equity Bancshares, is currently generating about -0.05 of returns per unit of risk over similar time horizon. If you would invest  4,254  in Equity Bancshares, on December 27, 2024 and sell it today you would lose (216.00) from holding Equity Bancshares, or give up 5.08% of portfolio value over 90 days.

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

Fifth Third Bancorp  vs.  Equity Bancshares,

Fifth Third Bancorp

Risk-Adjusted Performance

Very Weak

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

Equity Bancshares,

Risk-Adjusted Performance

Very Weak

Over the last 90 days Equity Bancshares, has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent fundamental drivers, Equity Bancshares, is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Fifth Third and Equity Bancshares,

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

The idea behind Fifth Third Bancorp and Equity Bancshares, 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.