Correlation Between Citizens Northern and Fifth Third
Can any of the company-specific risk be diversified away by investing in both Citizens Northern 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 Citizens Northern and Fifth Third into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Citizens Northern Corp and Fifth Third Bancorp, you can compare the effects of market volatilities on Citizens Northern 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 Citizens Northern with a short position of Fifth Third. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citizens Northern and Fifth Third.
Diversification Opportunities for Citizens Northern and Fifth Third
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Citizens and Fifth is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Citizens Northern Corp 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 Citizens Northern 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 Citizens Northern Corp 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 Citizens Northern i.e., Citizens Northern and Fifth Third go up and down completely randomly.
Pair Corralation between Citizens Northern and Fifth Third
Given the investment horizon of 90 days Citizens Northern is expected to generate 5.86 times less return on investment than Fifth Third. In addition to that, Citizens Northern is 1.6 times more volatile than Fifth Third Bancorp. It trades about 0.01 of its total potential returns per unit of risk. Fifth Third Bancorp is currently generating about 0.13 per unit of volatility. If you would invest 3,284 in Fifth Third Bancorp on August 29, 2024 and sell it today you would earn a total of 1,534 from holding Fifth Third Bancorp or generate 46.73% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Citizens Northern Corp vs. Fifth Third Bancorp
Performance |
| Timeline |
| Citizens Northern Corp |
| Fifth Third Bancorp |
Citizens Northern and Fifth Third Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Citizens Northern and Fifth Third
The main advantage of trading using opposite Citizens Northern and Fifth Third positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citizens Northern 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.| Citizens Northern vs. Penns Woods Bancorp | Citizens Northern vs. Chemung Financial Corp | Citizens Northern vs. Enterprise Bancorp |
| Fifth Third vs. First Northwest Bancorp | Fifth Third vs. First Financial Northwest | Fifth Third vs. CF Bankshares |
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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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