Correlation Between Fifth Third and Omnia Wellness

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Can any of the company-specific risk be diversified away by investing in both Fifth Third and Omnia Wellness 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 Omnia Wellness 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 Omnia Wellness, you can compare the effects of market volatilities on Fifth Third and Omnia Wellness 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 Omnia Wellness. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fifth Third and Omnia Wellness.

Diversification Opportunities for Fifth Third and Omnia Wellness

-0.43
  Correlation Coefficient

Very good diversification

The 3 months correlation between Fifth and Omnia is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding Fifth Third Bancorp and Omnia Wellness in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Omnia Wellness 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 Omnia Wellness. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Omnia Wellness has no effect on the direction of Fifth Third i.e., Fifth Third and Omnia Wellness go up and down completely randomly.

Pair Corralation between Fifth Third and Omnia Wellness

Assuming the 90 days horizon Fifth Third Bancorp is expected to generate 0.02 times more return on investment than Omnia Wellness. However, Fifth Third Bancorp is 45.61 times less risky than Omnia Wellness. It trades about 0.13 of its potential returns per unit of risk. Omnia Wellness is currently generating about -0.01 per unit of risk. If you would invest  2,513  in Fifth Third Bancorp on May 13, 2022 and sell it today you would earn a total of  55.00  from holding Fifth Third Bancorp or generate 2.19% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthVery Weak
Accuracy95.65%
ValuesDaily Returns

Fifth Third Bancorp  vs.  Omnia Wellness

 Performance (%) 
       Timeline  
Fifth Third Bancorp 
Fifth Performance
7 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Fifth Third Bancorp are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy fundamental drivers, Fifth Third is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the insiders.

Fifth Price Channel

Omnia Wellness 
Omnia Performance
5 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Omnia Wellness are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Omnia Wellness reported solid returns over the last few months and may actually be approaching a breakup point.

Omnia Price Channel

Fifth Third and Omnia Wellness Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Fifth Third and Omnia Wellness

The main advantage of trading using opposite Fifth Third and Omnia Wellness positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fifth Third position performs unexpectedly, Omnia Wellness 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 Omnia Wellness will offset losses from the drop in Omnia Wellness' long position.

Fifth Third Bancorp

Pair trading matchups for Fifth Third

The idea behind Fifth Third Bancorp and Omnia Wellness pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

Omnia Wellness

Pair trading matchups for Omnia Wellness

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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.

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