Correlation Between Fifth Third and WesBanco
Can any of the company-specific risk be diversified away by investing in both Fifth Third and WesBanco 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 WesBanco 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 WesBanco, you can compare the effects of market volatilities on Fifth Third and WesBanco 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 WesBanco. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fifth Third and WesBanco.
Diversification Opportunities for Fifth Third and WesBanco
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Fifth and WesBanco is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Fifth Third Bancorp and WesBanco in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WesBanco 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 WesBanco. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WesBanco has no effect on the direction of Fifth Third i.e., Fifth Third and WesBanco go up and down completely randomly.
Pair Corralation between Fifth Third and WesBanco
Given the investment horizon of 90 days Fifth Third is expected to generate 1.38 times less return on investment than WesBanco. But when comparing it to its historical volatility, Fifth Third Bancorp is 1.57 times less risky than WesBanco. It trades about 0.2 of its potential returns per unit of risk. WesBanco is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest 3,151 in WesBanco on August 31, 2024 and sell it today you would earn a total of 394.00 from holding WesBanco or generate 12.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fifth Third Bancorp vs. WesBanco
Performance |
| Timeline |
| Fifth Third Bancorp |
| WesBanco |
Fifth Third and WesBanco Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fifth Third and WesBanco
The main advantage of trading using opposite Fifth Third and WesBanco positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fifth Third position performs unexpectedly, WesBanco 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 WesBanco will offset losses from the drop in WesBanco's long position.| Fifth Third vs. KeyCorp | Fifth Third vs. Regions Financial | Fifth Third vs. Zions Bancorporation | Fifth Third vs. Huntington Bancshares Incorporated |
| WesBanco vs. Union Bankshares | WesBanco vs. Home Bancorp | WesBanco vs. Rhinebeck Bancorp | WesBanco vs. LINKBANCORP |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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