Correlation Between First Financial and Wintrust Financial
Can any of the company-specific risk be diversified away by investing in both First Financial 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 First Financial and Wintrust Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between First Financial Northwest and Wintrust Financial, you can compare the effects of market volatilities on First Financial 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 First Financial with a short position of Wintrust Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Financial and Wintrust Financial.
Diversification Opportunities for First Financial and Wintrust Financial
-0.21 | Correlation Coefficient |
Very good diversification
The 3 months correlation between First and Wintrust is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding First Financial Northwest and Wintrust Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wintrust Financial and First 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 First Financial Northwest 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 has no effect on the direction of First Financial i.e., First Financial and Wintrust Financial go up and down completely randomly.
Pair Corralation between First Financial and Wintrust Financial
Given the investment horizon of 90 days First Financial Northwest is expected to under-perform the Wintrust Financial. But the stock apears to be less risky and, when comparing its historical volatility, First Financial Northwest is 3.13 times less risky than Wintrust Financial. The stock trades about -0.01 of its potential returns per unit of risk. The Wintrust Financial is currently generating about 0.26 of returns per unit of risk over similar time horizon. If you would invest 11,566 in Wintrust Financial on August 29, 2024 and sell it today you would earn a total of 2,348 from holding Wintrust Financial or generate 20.3% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
First Financial Northwest vs. Wintrust Financial
Performance |
| Timeline |
| First Financial Northwest |
| Wintrust Financial |
First Financial and Wintrust Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Financial and Wintrust Financial
The main advantage of trading using opposite First Financial and Wintrust Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Financial 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.| First Financial vs. Home Federal Bancorp | First Financial vs. First Northwest Bancorp | First Financial vs. First Capital | First Financial vs. Community West Bancshares |
| Wintrust Financial vs. Bank of Marin | Wintrust Financial vs. First Financial | Wintrust Financial vs. TriCo Bancshares | Wintrust Financial vs. Community Trust Bancorp |
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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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