Correlation Between Wintrust Financial and Midland States

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

Diversification Opportunities for Wintrust Financial and Midland States

-0.74

Correlation Coefficient

Wintrust Financial  Midland States

Pay attention - limited upside

The 3 months correlation between Wintrust and Midland is -0.74. Overlapping area represents the amount of risk that can be diversified away by holding Wintrust Financial Corp and Midland States Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Midland States 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 Midland States. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Midland States Bancorp has no effect on the direction of Wintrust Financial i.e., Wintrust Financial and Midland States go up and down completely randomly.

Pair Corralation between Wintrust Financial and Midland States

Assuming the 90 days horizon Wintrust Financial Corp is expected to generate 0.11 times more return on investment than Midland States. However, Wintrust Financial Corp is 8.85 times less risky than Midland States. It trades about 0.25 of its potential returns per unit of risk. Midland States Bancorp is currently generating about -0.07 per unit of risk. If you would invest  2,495  in Wintrust Financial Corp on December 30, 2024 and sell it today you would earn a total of  43.00  from holding Wintrust Financial Corp or generate 1.72% return on investment over 90 days.

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

Wintrust Financial Corp  vs.  Midland States Bancorp

Wintrust Financial Corp

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Wintrust Financial Corp are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable fundamental indicators, Wintrust Financial is not utilizing all of its potentials. The recent stock price agitation, may contribute to short-term losses for the retail investors.

Midland States Bancorp

Risk-Adjusted Performance

Very Weak

Over the last 90 days Midland States Bancorp has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable forward indicators, Midland States is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Wintrust Financial and Midland States

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

The idea behind Wintrust Financial Corp and Midland States 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.