Correlation Between Fifth Third and Valley National
Can any of the company-specific risk be diversified away by investing in both Fifth Third and Valley 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 Valley 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 Valley National Bancorp, you can compare the effects of market volatilities on Fifth Third and Valley 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 Valley National. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fifth Third and Valley National.
Diversification Opportunities for Fifth Third and Valley National
0.32 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Fifth and Valley is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Fifth Third Bancorp and Valley National Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Valley 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 Valley National. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Valley National Bancorp has no effect on the direction of Fifth Third i.e., Fifth Third and Valley National go up and down completely randomly.
Pair Corralation between Fifth Third and Valley National
Assuming the 90 days horizon Fifth Third is expected to generate 1.18 times less return on investment than Valley National. But when comparing it to its historical volatility, Fifth Third Bancorp is 2.09 times less risky than Valley National. It trades about 0.05 of its potential returns per unit of risk. Valley National Bancorp is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 2,237 in Valley National Bancorp on January 11, 2025 and sell it today you would earn a total of 88.00 from holding Valley National Bancorp or generate 3.93% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fifth Third Bancorp vs. Valley National Bancorp
Performance |
| Timeline |
| Fifth Third Bancorp |
| Valley National Bancorp |
Fifth Third and Valley National Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fifth Third and Valley National
The main advantage of trading using opposite Fifth Third and Valley National positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fifth Third position performs unexpectedly, Valley 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 Valley National will offset losses from the drop in Valley National's long position.| Fifth Third vs. KeyCorp | Fifth Third vs. KeyCorp | Fifth Third vs. Regions Financial | Fifth Third vs. US Bancorp |
| Valley National vs. KeyCorp | Valley National vs. Regions Financial | Valley National vs. US Bancorp | Valley National vs. KeyCorp |
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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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