Correlation Between Fifth Third and Greenville Federal

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

Diversification Opportunities for Fifth Third and Greenville Federal

0.57

Correlation Coefficient

Fifth Third  Greenville Federal

Very weak diversification

The 3 months correlation between Fifth and Greenville is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Fifth Third Bancorp and Greenville Federal Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Greenville Federal 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 Greenville Federal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Greenville Federal has no effect on the direction of Fifth Third i.e., Fifth Third and Greenville Federal go up and down completely randomly.

Pair Corralation between Fifth Third and Greenville Federal

Assuming the 90 days horizon Fifth Third is expected to generate 3.99 times less return on investment than Greenville Federal. But when comparing it to its historical volatility, Fifth Third Bancorp is 2.11 times less risky than Greenville Federal. It trades about 0.04 of its potential returns per unit of risk. Greenville Federal Financial is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  660.00  in Greenville Federal Financial on September 4, 2024 and sell it today you would earn a total of  40.00  from holding Greenville Federal Financial or generate 6.06% 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.  Greenville Federal Financial

Fifth Third Bancorp

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Fifth Third Bancorp are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable fundamental drivers, Fifth Third is not utilizing all of its potentials. The recent stock price agitation, may contribute to short-term losses for the retail investors.

Greenville Federal

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Greenville Federal Financial are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable technical and fundamental indicators, Greenville Federal is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Fifth Third and Greenville Federal

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

The idea behind Fifth Third Bancorp and Greenville Federal Financial 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.