Correlation Between Tectonic Financial and Wintrust Financial
Can any of the company-specific risk be diversified away by investing in both Tectonic 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 Tectonic 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 Tectonic Financial PR and Wintrust Financial, you can compare the effects of market volatilities on Tectonic 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 Tectonic Financial with a short position of Wintrust Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tectonic Financial and Wintrust Financial.
Diversification Opportunities for Tectonic Financial and Wintrust Financial
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Tectonic and Wintrust is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Tectonic Financial PR and Wintrust Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wintrust Financial and Tectonic 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 Tectonic Financial PR 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 Tectonic Financial i.e., Tectonic Financial and Wintrust Financial go up and down completely randomly.
Pair Corralation between Tectonic Financial and Wintrust Financial
Assuming the 90 days horizon Tectonic Financial is expected to generate 11.89 times less return on investment than Wintrust Financial. But when comparing it to its historical volatility, Tectonic Financial PR is 2.94 times less risky than Wintrust Financial. It trades about 0.07 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 11,566 in Wintrust Financial on August 28, 2024 and sell it today you would earn a total of 2,263 from holding Wintrust Financial or generate 19.57% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Tectonic Financial PR vs. Wintrust Financial
Performance |
| Timeline |
| Tectonic Financial |
| Wintrust Financial |
Tectonic Financial and Wintrust Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Tectonic Financial and Wintrust Financial
The main advantage of trading using opposite Tectonic Financial and Wintrust Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tectonic 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.| Tectonic Financial vs. First Guaranty Bancshares | Tectonic Financial vs. First Merchants | Tectonic Financial vs. Associated Banc Corp | Tectonic Financial vs. Absa Group Limited |
| 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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