Correlation Between Northern Trust and Fifth Third
Can any of the company-specific risk be diversified away by investing in both Northern Trust and Fifth Third 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 Northern Trust and Fifth Third into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Northern Trust and Fifth Third Bancorp, you can compare the effects of market volatilities on Northern Trust and Fifth Third 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 Northern Trust with a short position of Fifth Third. Check out your portfolio center. Please also check ongoing floating volatility patterns of Northern Trust and Fifth Third.
Diversification Opportunities for Northern Trust and Fifth Third
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Northern and Fifth is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Northern Trust and Fifth Third Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fifth Third Bancorp and Northern Trust 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 Northern Trust are associated (or correlated) with Fifth Third. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fifth Third Bancorp has no effect on the direction of Northern Trust i.e., Northern Trust and Fifth Third go up and down completely randomly.
Pair Corralation between Northern Trust and Fifth Third
Assuming the 90 days horizon Northern Trust is expected to generate 0.82 times more return on investment than Fifth Third. However, Northern Trust is 1.22 times less risky than Fifth Third. It trades about 0.17 of its potential returns per unit of risk. Fifth Third Bancorp is currently generating about 0.08 per unit of risk. If you would invest 1,910 in Northern Trust on June 7, 2025 and sell it today you would earn a total of 129.00 from holding Northern Trust or generate 6.75% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 98.39% |
| Values | Daily Returns |
Northern Trust vs. Fifth Third Bancorp
Performance |
| Timeline |
| Northern Trust |
| Fifth Third Bancorp |
Northern Trust and Fifth Third Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Northern Trust and Fifth Third
The main advantage of trading using opposite Northern Trust and Fifth Third positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Northern Trust position performs unexpectedly, Fifth Third 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 Fifth Third will offset losses from the drop in Fifth Third's long position.| Northern Trust vs. Remgro Limited | Northern Trust vs. Partners Group | Northern Trust vs. Julius Baer Group | Northern Trust vs. Fifth Third Bancorp |
| Fifth Third vs. Fifth Third Bancorp | Fifth Third vs. Fifth Third Bancorp | Fifth Third vs. First Citizens BancShares | Fifth Third vs. Northern Trust |
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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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