Correlation Between Wintrust Financial and WesBanco

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

Diversification Opportunities for Wintrust Financial and WesBanco

0.88

Correlation Coefficient

Wintrust Financial  WesBanco

Very poor diversification

The 3 months correlation between Wintrust and WesBanco is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Wintrust Financial Corp and WesBanco in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WesBanco 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 WesBanco. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WesBanco has no effect on the direction of Wintrust Financial i.e., Wintrust Financial and WesBanco go up and down completely randomly.

Pair Corralation between Wintrust Financial and WesBanco

Assuming the 90 days horizon Wintrust Financial is expected to generate 1.46 times less return on investment than WesBanco. But when comparing it to its historical volatility, Wintrust Financial Corp is 1.86 times less risky than WesBanco. It trades about 0.21 of its potential returns per unit of risk. WesBanco is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest  2,455  in WesBanco on September 13, 2024 and sell it today you would earn a total of  75.00  from holding WesBanco or generate 3.05% return on investment over 90 days.

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

Wintrust Financial Corp  vs.  WesBanco

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. 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.

WesBanco

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in WesBanco are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable fundamental indicators, WesBanco is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Wintrust Financial and WesBanco

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

The idea behind Wintrust Financial Corp and WesBanco 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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.