Correlation Between Wintrust Financial and Medallion Bank
Can any of the company-specific risk be diversified away by investing in both Wintrust Financial and Medallion 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 Medallion Bank 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 Medallion Bank PR, you can compare the effects of market volatilities on Wintrust Financial and Medallion 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 Medallion Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wintrust Financial and Medallion Bank.
Diversification Opportunities for Wintrust Financial and Medallion Bank
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Wintrust and Medallion is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Wintrust Financial Corp and Medallion Bank PR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Medallion Bank PR 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 Medallion Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Medallion Bank PR has no effect on the direction of Wintrust Financial i.e., Wintrust Financial and Medallion Bank go up and down completely randomly.
Pair Corralation between Wintrust Financial and Medallion Bank
Assuming the 90 days horizon Wintrust Financial is expected to generate 1.42 times less return on investment than Medallion Bank. But when comparing it to its historical volatility, Wintrust Financial Corp is 1.66 times less risky than Medallion Bank. It trades about 0.11 of its potential returns per unit of risk. Medallion Bank PR is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 2,363 in Medallion Bank PR on August 25, 2024 and sell it today you would earn a total of 207.00 from holding Medallion Bank PR or generate 8.76% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Wintrust Financial Corp vs. Medallion Bank PR
Performance |
| Timeline |
| Wintrust Financial Corp |
| Medallion Bank PR |
Wintrust Financial and Medallion Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Wintrust Financial and Medallion Bank
The main advantage of trading using opposite Wintrust Financial and Medallion Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wintrust Financial position performs unexpectedly, Medallion 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 Medallion Bank will offset losses from the drop in Medallion Bank's long position.| Wintrust Financial vs. Merchants Bancorp | Wintrust Financial vs. Merchants Bancorp | Wintrust Financial vs. Merchants Bancorp | Wintrust Financial vs. Merchants Bancorp |
| Medallion Bank vs. Merchants Bancorp | Medallion Bank vs. Medalist Diversified Reit | Medallion Bank vs. Northern Trust | Medallion Bank vs. First Citizens BancShares |
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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