Correlation Between Comerica and Fifth Third

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

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

Diversification Opportunities for Comerica and Fifth Third

0.97

Correlation Coefficient

Comerica  Fifth Third

Almost no diversification

The 3 months correlation between Comerica and Fifth is 0.97. Overlapping area represents the amount of risk that can be diversified away by holding Comerica 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 Comerica 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 Comerica 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 Comerica i.e., Comerica and Fifth Third go up and down completely randomly.

Pair Corralation between Comerica and Fifth Third

Considering the 90-day investment horizon Comerica is expected to generate 1.32 times more return on investment than Fifth Third. However, Comerica is 1.32 times more volatile than Fifth Third Bancorp. It trades about 0.05 of its potential returns per unit of risk. Fifth Third Bancorp is currently generating about 0.02 per unit of risk. If you would invest  5,875  in Comerica on September 27, 2024 and sell it today you would earn a total of  367.00  from holding Comerica or generate 6.25% return on investment over 90 days.

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

Comerica  vs.  Fifth Third Bancorp

Comerica

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Comerica are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat conflicting primary indicators, Comerica may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Fifth Third Bancorp

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Fifth Third Bancorp are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. 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 Comerica and Fifth Third

The main advantage of trading using opposite Comerica and Fifth Third positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Comerica 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 Comerica 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..