Correlation Between Temecula Valley and Wintrust Financial

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

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

Diversification Opportunities for Temecula Valley and Wintrust Financial

0.0

Correlation Coefficient

Temecula Valley  Wintrust Financial

Pay attention - limited upside

The 3 months correlation between Temecula and Wintrust is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Temecula Valley Bancorp and Wintrust Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wintrust Financial and Temecula Valley 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 Temecula Valley Bancorp 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 has no effect on the direction of Temecula Valley i.e., Temecula Valley and Wintrust Financial go up and down completely randomly.

Pair Corralation between Temecula Valley and Wintrust Financial

If you would invest  8,404  in Wintrust Financial on October 3, 2024 and sell it today you would earn a total of  4,067  from holding Wintrust Financial or generate 48.39% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	26.67%
Values	Daily Returns

Temecula Valley Bancorp  vs.  Wintrust Financial

Temecula Valley Bancorp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Temecula Valley Bancorp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable fundamental indicators, Temecula Valley is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Wintrust Financial

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Wintrust Financial are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of rather abnormal technical and fundamental indicators, Wintrust Financial exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Temecula Valley and Wintrust Financial

The main advantage of trading using opposite Temecula Valley and Wintrust Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Temecula Valley 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 Temecula Valley Bancorp and Wintrust Financial 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.

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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.