Correlation Between PacWest Bancorp and Wintrust Financial
Can any of the company-specific risk be diversified away by investing in both PacWest Bancorp 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 PacWest Bancorp and Wintrust Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PacWest Bancorp and Wintrust Financial Corp, you can compare the effects of market volatilities on PacWest Bancorp 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 PacWest Bancorp with a short position of Wintrust Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of PacWest Bancorp and Wintrust Financial.
Diversification Opportunities for PacWest Bancorp and Wintrust Financial
-0.05 | Correlation Coefficient |
Good diversification
The 3 months correlation between PacWest and Wintrust is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding PacWest Bancorp 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 PacWest Bancorp 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 PacWest Bancorp 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 PacWest Bancorp i.e., PacWest Bancorp and Wintrust Financial go up and down completely randomly.
Pair Corralation between PacWest Bancorp and Wintrust Financial
Given the investment horizon of 90 days PacWest Bancorp is expected to generate 10.27 times more return on investment than Wintrust Financial. However, PacWest Bancorp is 10.27 times more volatile than Wintrust Financial Corp. It trades about 0.01 of its potential returns per unit of risk. Wintrust Financial Corp is currently generating about 0.03 per unit of risk. If you would invest 2,409 in PacWest Bancorp on August 29, 2024 and sell it today you would lose (1,355) from holding PacWest Bancorp or give up 56.25% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 31.45% |
| Values | Daily Returns |
PacWest Bancorp vs. Wintrust Financial Corp
Performance |
| Timeline |
| PacWest Bancorp |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Wintrust Financial Corp |
PacWest Bancorp and Wintrust Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PacWest Bancorp and Wintrust Financial
The main advantage of trading using opposite PacWest Bancorp and Wintrust Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PacWest Bancorp 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.| PacWest Bancorp vs. Zions Bancorporation | PacWest Bancorp vs. KeyCorp | PacWest Bancorp vs. Comerica | PacWest Bancorp vs. First Horizon National |
| Wintrust Financial vs. Wintrust Financial Corp | Wintrust Financial vs. WesBanco | Wintrust Financial vs. Heartland Financial USA | Wintrust Financial vs. Pinnacle Financial Partners |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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