Correlation Between Fifth Third and Old National
Can any of the company-specific risk be diversified away by investing in both Fifth Third and Old 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 Old 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 Old National Bancorp, you can compare the effects of market volatilities on Fifth Third and Old 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 Old National. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fifth Third and Old National.
Diversification Opportunities for Fifth Third and Old National
0.44 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Fifth and Old is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Fifth Third Bancorp and Old National Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Old National Bancorp 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 Old National. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Old National Bancorp has no effect on the direction of Fifth Third i.e., Fifth Third and Old National go up and down completely randomly.
Pair Corralation between Fifth Third and Old National
Assuming the 90 days horizon Fifth Third is expected to generate 1.32 times less return on investment than Old National. But when comparing it to its historical volatility, Fifth Third Bancorp is 2.37 times less risky than Old National. It trades about 0.1 of its potential returns per unit of risk. Old National Bancorp is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 2,112 in Old National Bancorp on August 31, 2024 and sell it today you would earn a total of 448.00 from holding Old National Bancorp or generate 21.21% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fifth Third Bancorp vs. Old National Bancorp
Performance |
| Timeline |
| Fifth Third Bancorp |
| Old National Bancorp |
Fifth Third and Old National Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fifth Third and Old National
The main advantage of trading using opposite Fifth Third and Old National positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fifth Third position performs unexpectedly, Old 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 Old National will offset losses from the drop in Old National's long position.| Fifth Third vs. KeyCorp | Fifth Third vs. KeyCorp | Fifth Third vs. Regions Financial | Fifth Third vs. US Bancorp |
| Old National vs. KeyCorp | Old National vs. KeyCorp | Old National vs. Fifth Third Bancorp | Old National vs. Citizens Financial Group |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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