Correlation Between Tectonic Financial and Fifth Third

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

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

Diversification Opportunities for Tectonic Financial and Fifth Third

-0.19

Correlation Coefficient

Tectonic Financial  Fifth Third

Good diversification

The 3 months correlation between Tectonic and Fifth is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding Tectonic Financial PR 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 Tectonic Financial 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 Tectonic Financial PR 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 Tectonic Financial i.e., Tectonic Financial and Fifth Third go up and down completely randomly.

Pair Corralation between Tectonic Financial and Fifth Third

Assuming the 90 days horizon Tectonic Financial is expected to generate 1.73 times less return on investment than Fifth Third. But when comparing it to its historical volatility, Tectonic Financial PR is 1.29 times less risky than Fifth Third. It trades about 0.07 of its potential returns per unit of risk. Fifth Third Bancorp is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  1,941  in Fifth Third Bancorp on October 8, 2024 and sell it today you would earn a total of  215.00  from holding Fifth Third Bancorp or generate 11.08% return on investment over 90 days.

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

Tectonic Financial PR  vs.  Fifth Third Bancorp

Tectonic Financial

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Tectonic Financial PR are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable basic indicators, Tectonic Financial is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Fifth Third Bancorp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Fifth Third Bancorp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Preferred Stock's fundamental drivers remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Pair Trading with Tectonic Financial and Fifth Third

The main advantage of trading using opposite Tectonic Financial and Fifth Third positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tectonic Financial 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 Tectonic Financial PR 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 CEOs Directory module to screen CEOs from public companies around the world.