Correlation Between MT Bank and Wintrust Financial
Can any of the company-specific risk be diversified away by investing in both MT Bank 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 MT Bank and Wintrust Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between MT Bank and Wintrust Financial, you can compare the effects of market volatilities on MT Bank 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 MT Bank with a short position of Wintrust Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of MT Bank and Wintrust Financial.
Diversification Opportunities for MT Bank and Wintrust Financial
0.97 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between MTB and Wintrust is 0.97. Overlapping area represents the amount of risk that can be diversified away by holding MT Bank and Wintrust Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wintrust Financial and MT Bank 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 MT Bank 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 MT Bank i.e., MT Bank and Wintrust Financial go up and down completely randomly.
Pair Corralation between MT Bank and Wintrust Financial
Considering the 90-day investment horizon MT Bank is expected to generate 1.45 times less return on investment than Wintrust Financial. But when comparing it to its historical volatility, MT Bank is 1.14 times less risky than Wintrust Financial. It trades about 0.21 of its potential returns per unit of risk. Wintrust Financial is currently generating about 0.27 of returns per unit of risk over similar time horizon. If you would invest 11,549 in Wintrust Financial on September 1, 2024 and sell it today you would earn a total of 2,252 from holding Wintrust Financial or generate 19.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
MT Bank vs. Wintrust Financial
Performance |
| Timeline |
| MT Bank |
| Wintrust Financial |
MT Bank and Wintrust Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MT Bank and Wintrust Financial
The main advantage of trading using opposite MT Bank and Wintrust Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MT Bank 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.| MT Bank vs. US Bancorp | MT Bank vs. Truist Financial Corp | MT Bank vs. Fifth Third Bancorp | MT Bank vs. KeyCorp |
| 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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