Correlation Between Wintrust Financial and Valley National

Can any of the company-specific risk be diversified away by investing in both Wintrust Financial and Valley National 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 Valley National 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 Valley National Bancorp, you can compare the effects of market volatilities on Wintrust Financial and Valley National 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 Valley National. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wintrust Financial and Valley National.

Diversification Opportunities for Wintrust Financial and Valley National

0.39

Correlation Coefficient

Wintrust Financial  Valley National

Weak diversification

The 3 months correlation between Wintrust and Valley is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Wintrust Financial Corp and Valley National Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Valley National Bancorp 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 Valley National. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Valley National Bancorp has no effect on the direction of Wintrust Financial i.e., Wintrust Financial and Valley National go up and down completely randomly.

Pair Corralation between Wintrust Financial and Valley National

Assuming the 90 days horizon Wintrust Financial Corp is expected to generate 1.54 times more return on investment than Valley National. However, Wintrust Financial is 1.54 times more volatile than Valley National Bancorp. It trades about 0.09 of its potential returns per unit of risk. Valley National Bancorp is currently generating about 0.07 per unit of risk. If you would invest  2,478  in Wintrust Financial Corp on October 13, 2024 and sell it today you would earn a total of  17.00  from holding Wintrust Financial Corp or generate 0.69% return on investment over 90 days.

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

Wintrust Financial Corp  vs.  Valley National Bancorp

Wintrust Financial Corp

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Wintrust Financial Corp are ranked lower than 8 (%) 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.

Valley National Bancorp

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Valley National Bancorp are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Valley National 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 Valley National

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

The idea behind Wintrust Financial Corp and Valley National Bancorp 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..