Correlation Between Capital One and Wintrust Financial
Can any of the company-specific risk be diversified away by investing in both Capital One and Wintrust 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 Capital One and Wintrust Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Capital One Financial and Wintrust Financial Corp, you can compare the effects of market volatilities on Capital One and Wintrust 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 Capital One with a short position of Wintrust Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Capital One and Wintrust Financial.
Diversification Opportunities for Capital One and Wintrust Financial
-0.25 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Capital and Wintrust is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding Capital One Financial and Wintrust Financial Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wintrust Financial Corp and Capital One 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 Capital One Financial are associated (or correlated) with Wintrust Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wintrust Financial Corp has no effect on the direction of Capital One i.e., Capital One and Wintrust Financial go up and down completely randomly.
Pair Corralation between Capital One and Wintrust Financial
Assuming the 90 days trading horizon Capital One Financial is expected to generate 5.58 times more return on investment than Wintrust Financial. However, Capital One is 5.58 times more volatile than Wintrust Financial Corp. It trades about 0.12 of its potential returns per unit of risk. Wintrust Financial Corp is currently generating about 0.18 per unit of risk. If you would invest 2,040 in Capital One Financial on September 1, 2024 and sell it today you would earn a total of 59.00 from holding Capital One Financial or generate 2.89% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Capital One Financial vs. Wintrust Financial Corp
Performance |
| Timeline |
| Capital One Financial |
| Wintrust Financial Corp |
Capital One and Wintrust Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Capital One and Wintrust Financial
The main advantage of trading using opposite Capital One and Wintrust Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Capital One position performs unexpectedly, Wintrust 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 Wintrust Financial will offset losses from the drop in Wintrust Financial's long position.| Capital One vs. Capital One Financial | Capital One vs. Citizens Financial Group | Capital One vs. Wells Fargo | Capital One vs. Equitable Holdings |
| Wintrust Financial vs. KeyCorp | Wintrust Financial vs. KeyCorp | Wintrust Financial vs. Fifth Third Bancorp | Wintrust Financial vs. Citizens Financial Group |
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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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