Correlation Between Fifth Third and Citizens Northern
Can any of the company-specific risk be diversified away by investing in both Fifth Third and Citizens Northern 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 Citizens Northern 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 Citizens Northern Corp, you can compare the effects of market volatilities on Fifth Third and Citizens Northern 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 Citizens Northern. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fifth Third and Citizens Northern.
Diversification Opportunities for Fifth Third and Citizens Northern
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Fifth and Citizens is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Fifth Third Bancorp and Citizens Northern Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Citizens Northern Corp 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 Citizens Northern. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Citizens Northern Corp has no effect on the direction of Fifth Third i.e., Fifth Third and Citizens Northern go up and down completely randomly.
Pair Corralation between Fifth Third and Citizens Northern
Given the investment horizon of 90 days Fifth Third Bancorp is expected to generate 0.98 times more return on investment than Citizens Northern. However, Fifth Third Bancorp is 1.02 times less risky than Citizens Northern. It trades about 0.2 of its potential returns per unit of risk. Citizens Northern Corp is currently generating about 0.15 per unit of risk. If you would invest 4,405 in Fifth Third Bancorp on August 29, 2024 and sell it today you would earn a total of 413.50 from holding Fifth Third Bancorp or generate 9.39% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fifth Third Bancorp vs. Citizens Northern Corp
Performance |
| Timeline |
| Fifth Third Bancorp |
| Citizens Northern Corp |
Fifth Third and Citizens Northern Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fifth Third and Citizens Northern
The main advantage of trading using opposite Fifth Third and Citizens Northern positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fifth Third position performs unexpectedly, Citizens Northern 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 Citizens Northern will offset losses from the drop in Citizens Northern's long position.| Fifth Third vs. KeyCorp | Fifth Third vs. Regions Financial | Fifth Third vs. Zions Bancorporation | Fifth Third vs. Huntington Bancshares Incorporated |
| Citizens Northern vs. Penns Woods Bancorp | Citizens Northern vs. Chemung Financial Corp | Citizens Northern vs. Enterprise Bancorp |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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