Correlation Between CNB Financial and Fifth Third
Can any of the company-specific risk be diversified away by investing in both CNB 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 CNB 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 CNB Financial and Fifth Third Bancorp, you can compare the effects of market volatilities on CNB 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 CNB Financial with a short position of Fifth Third. Check out your portfolio center. Please also check ongoing floating volatility patterns of CNB Financial and Fifth Third.
Diversification Opportunities for CNB Financial and Fifth Third
0.9 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between CNB and Fifth is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding CNB 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 CNB 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 CNB 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 CNB Financial i.e., CNB Financial and Fifth Third go up and down completely randomly.
Pair Corralation between CNB Financial and Fifth Third
Given the investment horizon of 90 days CNB Financial is expected to generate 1.61 times more return on investment than Fifth Third. However, CNB Financial is 1.61 times more volatile than Fifth Third Bancorp. It trades about 0.13 of its potential returns per unit of risk. Fifth Third Bancorp is currently generating about 0.2 per unit of risk. If you would invest 2,600 in CNB Financial on August 27, 2024 and sell it today you would earn a total of 213.00 from holding CNB Financial or generate 8.19% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
CNB Financial vs. Fifth Third Bancorp
Performance |
| Timeline |
| CNB Financial |
| Fifth Third Bancorp |
CNB Financial and Fifth Third Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CNB Financial and Fifth Third
The main advantage of trading using opposite CNB Financial and Fifth Third positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CNB 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.| CNB Financial vs. Fifth Third Bancorp | CNB Financial vs. Zions Bancorporation | CNB Financial vs. Huntington Bancshares Incorporated | CNB Financial vs. Comerica |
| Fifth Third vs. KeyCorp | Fifth Third vs. Regions Financial | Fifth Third vs. Zions Bancorporation | Fifth Third vs. Huntington Bancshares Incorporated |
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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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