Correlation Between Wintrust Financial and Capital One
Can any of the company-specific risk be diversified away by investing in both Wintrust Financial and Capital One 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 Capital One into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Wintrust Financial Corp and Capital One Financial, you can compare the effects of market volatilities on Wintrust Financial and Capital One 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 Capital One. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wintrust Financial and Capital One.
Diversification Opportunities for Wintrust Financial and Capital One
-0.25 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Wintrust and Capital is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding Wintrust Financial Corp and Capital One Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Capital One Financial 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 Corp are associated (or correlated) with Capital One. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Capital One Financial has no effect on the direction of Wintrust Financial i.e., Wintrust Financial and Capital One go up and down completely randomly.
Pair Corralation between Wintrust Financial and Capital One
Assuming the 90 days horizon Wintrust Financial is expected to generate 3.75 times less return on investment than Capital One. But when comparing it to its historical volatility, Wintrust Financial Corp is 5.58 times less risky than Capital One. It trades about 0.18 of its potential returns per unit of risk. Capital One Financial is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 2,040 in Capital One Financial on September 1, 2024 and sell it today you would earn a total of 59.00 from holding Capital One Financial or generate 2.89% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Wintrust Financial Corp vs. Capital One Financial
Performance |
| Timeline |
| Wintrust Financial Corp |
| Capital One Financial |
Wintrust Financial and Capital One Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Wintrust Financial and Capital One
The main advantage of trading using opposite Wintrust Financial and Capital One positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wintrust Financial position performs unexpectedly, Capital One 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 Capital One will offset losses from the drop in Capital One's long position.| Wintrust Financial vs. KeyCorp | Wintrust Financial vs. KeyCorp | Wintrust Financial vs. Fifth Third Bancorp | Wintrust Financial vs. Citizens Financial Group |
| Capital One vs. Capital One Financial | Capital One vs. Citizens Financial Group | Capital One vs. Wells Fargo | Capital One vs. Equitable Holdings |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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