Correlation Between Wintrust Financial and Pinnacle Financial

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

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

Diversification Opportunities for Wintrust Financial and Pinnacle Financial

0.94

Correlation Coefficient

Wintrust Financial  Pinnacle Financial

Almost no diversification

The 3 months correlation between Wintrust and Pinnacle is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Wintrust Financial and Pinnacle Financial Partners in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pinnacle Financial and Wintrust Financial 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 Wintrust Financial are associated (or correlated) with Pinnacle Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pinnacle Financial has no effect on the direction of Wintrust Financial i.e., Wintrust Financial and Pinnacle Financial go up and down completely randomly.

Pair Corralation between Wintrust Financial and Pinnacle Financial

Given the investment horizon of 90 days Wintrust Financial is expected to under-perform the Pinnacle Financial. But the stock apears to be less risky and, when comparing its historical volatility, Wintrust Financial is 1.08 times less risky than Pinnacle Financial. The stock trades about -0.09 of its potential returns per unit of risk. The Pinnacle Financial Partners is currently generating about -0.06 of returns per unit of risk over similar time horizon. If you would invest  11,353  in Pinnacle Financial Partners on December 29, 2024 and sell it today you would lose (847.00) from holding Pinnacle Financial Partners or give up 7.46% of portfolio value over 90 days.

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

Wintrust Financial  vs.  Pinnacle Financial Partners

Wintrust Financial

Risk-Adjusted Performance

Very Weak

Over the last 90 days Wintrust Financial has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's technical and fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Pinnacle Financial

Risk-Adjusted Performance

Very Weak

Over the last 90 days Pinnacle Financial Partners has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest unsteady performance, the Stock's technical and fundamental indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

Pair Trading with Wintrust Financial and Pinnacle Financial

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

The idea behind Wintrust Financial and Pinnacle Financial Partners 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.