Correlation Between Triumph Financial and Fifth Third

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

Diversification Opportunities for Triumph Financial and Fifth Third

0.25

Correlation Coefficient

Triumph Financial  Fifth Third

Modest diversification

The 3 months correlation between Triumph and Fifth is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Triumph Financial 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 Triumph 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 Triumph Financial 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 Triumph Financial i.e., Triumph Financial and Fifth Third go up and down completely randomly.

Pair Corralation between Triumph Financial and Fifth Third

Assuming the 90 days horizon Triumph Financial is expected to generate 1.82 times less return on investment than Fifth Third. But when comparing it to its historical volatility, Triumph Financial is 1.14 times less risky than Fifth Third. It trades about 0.03 of its potential returns per unit of risk. Fifth Third Bancorp is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  3,005  in Fifth Third Bancorp on September 16, 2024 and sell it today you would earn a total of  1,550  from holding Fifth Third Bancorp or generate 51.58% return on investment over 90 days.

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

Triumph Financial  vs.  Fifth Third Bancorp

Triumph Financial

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Triumph Financial are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Triumph Financial may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Fifth Third Bancorp

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Fifth Third Bancorp are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unfluctuating basic indicators, Fifth Third may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Triumph Financial and Fifth Third

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

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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.