Correlation Between Wintrust Financial and Mercantile Bank
Can any of the company-specific risk be diversified away by investing in both Wintrust Financial and Mercantile Bank 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 Wintrust Financial and Mercantile Bank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Wintrust Financial and Mercantile Bank, you can compare the effects of market volatilities on Wintrust Financial and Mercantile Bank 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 Wintrust Financial with a short position of Mercantile Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wintrust Financial and Mercantile Bank.
Diversification Opportunities for Wintrust Financial and Mercantile Bank
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Wintrust and Mercantile is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Wintrust Financial and Mercantile Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mercantile Bank and Wintrust 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 Wintrust Financial are associated (or correlated) with Mercantile Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mercantile Bank has no effect on the direction of Wintrust Financial i.e., Wintrust Financial and Mercantile Bank go up and down completely randomly.
Pair Corralation between Wintrust Financial and Mercantile Bank
Given the investment horizon of 90 days Wintrust Financial is expected to generate 0.77 times more return on investment than Mercantile Bank. However, Wintrust Financial is 1.31 times less risky than Mercantile Bank. It trades about 0.14 of its potential returns per unit of risk. Mercantile Bank is currently generating about 0.1 per unit of risk. If you would invest 9,664 in Wintrust Financial on August 25, 2024 and sell it today you would earn a total of 4,044 from holding Wintrust Financial or generate 41.85% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Wintrust Financial vs. Mercantile Bank
Performance |
| Timeline |
| Wintrust Financial |
| Mercantile Bank |
Wintrust Financial and Mercantile Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Wintrust Financial and Mercantile Bank
The main advantage of trading using opposite Wintrust Financial and Mercantile Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wintrust Financial position performs unexpectedly, Mercantile Bank 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 Mercantile Bank will offset losses from the drop in Mercantile Bank's long position.| Wintrust Financial vs. Bank of Marin | Wintrust Financial vs. First Financial | Wintrust Financial vs. TriCo Bancshares | Wintrust Financial vs. Community Trust Bancorp |
| Mercantile Bank vs. Great Southern Bancorp | Mercantile Bank vs. First Bancorp | Mercantile Bank vs. MidWestOne Financial Group | Mercantile Bank vs. Lakeland Financial |
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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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