Correlation Between Wintrust Financial and Popular

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

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

Diversification Opportunities for Wintrust Financial and Popular

-0.13

Correlation Coefficient

Wintrust Financial  Popular

Good diversification

The 3 months correlation between Wintrust and Popular is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding Wintrust Financial Corp and Popular in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Popular 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 Corp are associated (or correlated) with Popular. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Popular has no effect on the direction of Wintrust Financial i.e., Wintrust Financial and Popular go up and down completely randomly.

Pair Corralation between Wintrust Financial and Popular

Assuming the 90 days horizon Wintrust Financial Corp is expected to generate 0.28 times more return on investment than Popular. However, Wintrust Financial Corp is 3.57 times less risky than Popular. It trades about 0.21 of its potential returns per unit of risk. Popular is currently generating about 0.03 per unit of risk. If you would invest  2,441  in Wintrust Financial Corp on September 3, 2024 and sell it today you would earn a total of  94.00  from holding Wintrust Financial Corp or generate 3.85% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	96.88%
Values	Daily Returns

Wintrust Financial Corp  vs.  Popular

Wintrust Financial Corp

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Wintrust Financial Corp are ranked lower than 16 (%) 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 recent stock price disarray, may contribute to short-term losses for the investors.

Popular

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Popular are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Popular is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Wintrust Financial and Popular

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

The idea behind Wintrust Financial Corp and Popular 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.