Correlation Between Fifth Third and Park National
Can any of the company-specific risk be diversified away by investing in both Fifth Third and Park National 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 Park National 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 Park National, you can compare the effects of market volatilities on Fifth Third and Park National 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 Park National. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fifth Third and Park National.
Diversification Opportunities for Fifth Third and Park National
0.91 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Fifth and Park is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Fifth Third Bancorp and Park National in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Park National 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 Park National. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Park National has no effect on the direction of Fifth Third i.e., Fifth Third and Park National go up and down completely randomly.
Pair Corralation between Fifth Third and Park National
Given the investment horizon of 90 days Fifth Third is expected to generate 1.22 times less return on investment than Park National. But when comparing it to its historical volatility, Fifth Third Bancorp is 2.12 times less risky than Park National. It trades about 0.2 of its potential returns per unit of risk. Park National is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 17,494 in Park National on August 31, 2024 and sell it today you would earn a total of 1,724 from holding Park National or generate 9.85% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fifth Third Bancorp vs. Park National
Performance |
| Timeline |
| Fifth Third Bancorp |
| Park National |
Fifth Third and Park National Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fifth Third and Park National
The main advantage of trading using opposite Fifth Third and Park National positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fifth Third position performs unexpectedly, Park National 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 Park National will offset losses from the drop in Park National's long position.| Fifth Third vs. KeyCorp | Fifth Third vs. Regions Financial | Fifth Third vs. Zions Bancorporation | Fifth Third vs. Huntington Bancshares Incorporated |
| Park National vs. Peoples Bancorp | Park National vs. Lakeland Financial | Park National vs. NBT Bancorp | Park National vs. Trustmark |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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