Correlation Between Fifth Third and Citigroup
Can any of the company-specific risk be diversified away by investing in both Fifth Third and Citigroup 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 Citigroup 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 Citigroup, you can compare the effects of market volatilities on Fifth Third and Citigroup 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 Citigroup. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fifth Third and Citigroup.
Diversification Opportunities for Fifth Third and Citigroup
0.59 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Fifth and Citigroup is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Fifth Third Bancorp and Citigroup in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Citigroup 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 Citigroup. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Citigroup has no effect on the direction of Fifth Third i.e., Fifth Third and Citigroup go up and down completely randomly.
Pair Corralation between Fifth Third and Citigroup
Given the investment horizon of 90 days Fifth Third is expected to generate 1.47 times less return on investment than Citigroup. In addition to that, Fifth Third is 1.74 times more volatile than Citigroup. It trades about 0.22 of its total potential returns per unit of risk. Citigroup is currently generating about 0.56 per unit of volatility. If you would invest 5,571 in Citigroup on December 29, 2023 and sell it today you would earn a total of 704.00 from holding Citigroup or generate 12.64% 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. Citigroup
Performance |
Timeline |
Fifth Third Bancorp |
Citigroup |
Fifth Third and Citigroup Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Fifth Third and Citigroup
The main advantage of trading using opposite Fifth Third and Citigroup positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fifth Third position performs unexpectedly, Citigroup 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 Citigroup will offset losses from the drop in Citigroup's long position.Fifth Third vs. Merchants Bancorp | Fifth Third vs. Mercantile Bank | Fifth Third vs. MetroCity Bankshares | Fifth Third vs. Macatawa Bank |
Citigroup vs. Bank Of America | Citigroup vs. Deckers Outdoor | Citigroup vs. Intuitive Machines | Citigroup vs. Liberty Interactive LLC |
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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.
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