Correlation Between Greene County and Fifth Third

Can any of the company-specific risk be diversified away by investing in both Greene County 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 Greene County and Fifth Third into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Greene County Bancorp and Fifth Third Bancorp, you can compare the effects of market volatilities on Greene County 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 Greene County with a short position of Fifth Third. Check out your portfolio center. Please also check ongoing floating volatility patterns of Greene County and Fifth Third.

Diversification Opportunities for Greene County and Fifth Third

0.59

Correlation Coefficient

Greene County  Fifth Third

Very weak diversification

The 3 months correlation between Greene and Fifth is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Greene County 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 Greene County 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 Greene County 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 Greene County i.e., Greene County and Fifth Third go up and down completely randomly.

Pair Corralation between Greene County and Fifth Third

Given the investment horizon of 90 days Greene County Bancorp is expected to under-perform the Fifth Third. In addition to that, Greene County is 1.08 times more volatile than Fifth Third Bancorp. It trades about -0.2 of its total potential returns per unit of risk. Fifth Third Bancorp is currently generating about -0.06 per unit of volatility. If you would invest  4,253  in Fifth Third Bancorp on December 27, 2024 and sell it today you would lose (236.00) from holding Fifth Third Bancorp or give up 5.55% of portfolio value over 90 days.

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

Greene County Bancorp  vs.  Fifth Third Bancorp

Greene County Bancorp

Risk-Adjusted Performance

Very Weak

Over the last 90 days Greene County Bancorp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's fundamental drivers remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

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.

Pair Trading with Greene County and Fifth Third

The main advantage of trading using opposite Greene County and Fifth Third positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Greene County 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.

The idea behind Greene County Bancorp and Fifth Third Bancorp 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.