Correlation Between Washington Trust and Wintrust Financial
Can any of the company-specific risk be diversified away by investing in both Washington Trust 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 Washington Trust and Wintrust Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Washington Trust Bancorp and Wintrust Financial Corp, you can compare the effects of market volatilities on Washington Trust 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 Washington Trust with a short position of Wintrust Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Washington Trust and Wintrust Financial.
Diversification Opportunities for Washington Trust and Wintrust Financial
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Washington and Wintrust is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Washington Trust 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 Washington Trust 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 Washington Trust 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 Washington Trust i.e., Washington Trust and Wintrust Financial go up and down completely randomly.
Pair Corralation between Washington Trust and Wintrust Financial
Given the investment horizon of 90 days Washington Trust Bancorp is expected to generate 18.17 times more return on investment than Wintrust Financial. However, Washington Trust is 18.17 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 3,413 in Washington Trust Bancorp on September 1, 2024 and sell it today you would earn a total of 301.00 from holding Washington Trust Bancorp or generate 8.82% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Washington Trust Bancorp vs. Wintrust Financial Corp
Performance |
| Timeline |
| Washington Trust Bancorp |
| Wintrust Financial Corp |
Washington Trust and Wintrust Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Washington Trust and Wintrust Financial
The main advantage of trading using opposite Washington Trust and Wintrust Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Washington Trust 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.| Washington Trust vs. Univest Pennsylvania | Washington Trust vs. Waterstone Financial | Washington Trust vs. Mid Penn Bancorp | Washington Trust vs. ST Bancorp |
| 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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