Correlation Between Fifth Third and Farmers National
Can any of the company-specific risk be diversified away by investing in both Fifth Third and Farmers National 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 Farmers National 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 Farmers National Banc, you can compare the effects of market volatilities on Fifth Third and Farmers National 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 Farmers National. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fifth Third and Farmers National.
Diversification Opportunities for Fifth Third and Farmers National
0.51 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Fifth and Farmers is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Fifth Third Bancorp and Farmers National Banc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Farmers National Banc 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 Farmers National. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Farmers National Banc has no effect on the direction of Fifth Third i.e., Fifth Third and Farmers National go up and down completely randomly.
Pair Corralation between Fifth Third and Farmers National
Given the investment horizon of 90 days Fifth Third Bancorp is expected to generate 0.93 times more return on investment than Farmers National. However, Fifth Third Bancorp is 1.08 times less risky than Farmers National. It trades about -0.05 of its potential returns per unit of risk. Farmers National Banc is currently generating about -0.07 per unit of risk. If you would invest 4,235 in Fifth Third Bancorp on December 28, 2024 and sell it today you would lose (218.00) from holding Fifth Third Bancorp or give up 5.15% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Fifth Third Bancorp vs. Farmers National Banc
Performance |
Timeline |
Fifth Third Bancorp |
Farmers National Banc |
Fifth Third and Farmers National Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Fifth Third and Farmers National
The main advantage of trading using opposite Fifth Third and Farmers National positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fifth Third position performs unexpectedly, Farmers National 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 Farmers National will offset losses from the drop in Farmers National's long position.Fifth Third vs. Banco Santander Brasil | Fifth Third vs. Banco Bradesco SA | Fifth Third vs. CF Bankshares | Fifth Third vs. Grupo Aval |
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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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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