Correlation Between Veritex Holdings and Wintrust Financial

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

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

Diversification Opportunities for Veritex Holdings and Wintrust Financial

0.98

Correlation Coefficient

Veritex Holdings  Wintrust Financial

Almost no diversification

The 3 months correlation between Veritex and Wintrust is 0.98. Overlapping area represents the amount of risk that can be diversified away by holding Veritex Holdings and Wintrust Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wintrust Financial and Veritex Holdings 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 Veritex Holdings 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 Veritex Holdings i.e., Veritex Holdings and Wintrust Financial go up and down completely randomly.

Pair Corralation between Veritex Holdings and Wintrust Financial

Given the investment horizon of 90 days Veritex Holdings is expected to generate 2.0 times less return on investment than Wintrust Financial. In addition to that, Veritex Holdings is 1.3 times more volatile than Wintrust Financial. It trades about 0.02 of its total potential returns per unit of risk. Wintrust Financial is currently generating about 0.06 per unit of volatility. If you would invest  7,969  in Wintrust Financial on September 12, 2024 and sell it today you would earn a total of  5,267  from holding Wintrust Financial or generate 66.09% return on investment over 90 days.

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

Veritex Holdings  vs.  Wintrust Financial

Veritex Holdings

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Veritex Holdings are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating basic indicators, Veritex Holdings showed solid returns over the last few months and may actually be approaching a breakup point.

Wintrust Financial

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Wintrust Financial are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady 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 Veritex Holdings and Wintrust Financial

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

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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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.