Correlation Between Eagle Bancorp and Wintrust Financial

Can any of the company-specific risk be diversified away by investing in both Eagle Bancorp and Wintrust Financial 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 Eagle Bancorp and Wintrust Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Eagle Bancorp Montana and Wintrust Financial Corp, you can compare the effects of market volatilities on Eagle Bancorp and Wintrust Financial 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 Eagle Bancorp with a short position of Wintrust Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eagle Bancorp and Wintrust Financial.

Diversification Opportunities for Eagle Bancorp and Wintrust Financial

0.66

Correlation Coefficient

Eagle Bancorp  Wintrust Financial

Poor diversification

The 3 months correlation between Eagle and Wintrust is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Eagle Bancorp Montana and Wintrust Financial Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wintrust Financial Corp and Eagle Bancorp 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 Eagle Bancorp Montana are associated (or correlated) with Wintrust Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wintrust Financial Corp has no effect on the direction of Eagle Bancorp i.e., Eagle Bancorp and Wintrust Financial go up and down completely randomly.

Pair Corralation between Eagle Bancorp and Wintrust Financial

Given the investment horizon of 90 days Eagle Bancorp Montana is expected to generate 8.3 times more return on investment than Wintrust Financial. However, Eagle Bancorp is 8.3 times more volatile than Wintrust Financial Corp. It trades about 0.13 of its potential returns per unit of risk. Wintrust Financial Corp is currently generating about 0.15 per unit of risk. If you would invest  1,484  in Eagle Bancorp Montana on December 29, 2024 and sell it today you would earn a total of  203.00  from holding Eagle Bancorp Montana or generate 13.68% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Eagle Bancorp Montana  vs.  Wintrust Financial Corp

Eagle Bancorp Montana

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Eagle Bancorp Montana are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile primary indicators, Eagle Bancorp unveiled solid returns over the last few months and may actually be approaching a breakup point.

Wintrust Financial Corp

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Wintrust Financial Corp are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy fundamental indicators, Wintrust Financial is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Eagle Bancorp and Wintrust Financial

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

The idea behind Eagle Bancorp Montana and Wintrust Financial Corp 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.

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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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.