Correlation Between Wintrust Financial and Pinnacle Financial
Can any of the company-specific risk be diversified away by investing in both Wintrust Financial and Pinnacle 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 Wintrust Financial and Pinnacle Financial 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 Pinnacle Financial Partners, you can compare the effects of market volatilities on Wintrust Financial and Pinnacle 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 Wintrust Financial with a short position of Pinnacle Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wintrust Financial and Pinnacle Financial.
Diversification Opportunities for Wintrust Financial and Pinnacle Financial
0.9 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Wintrust and Pinnacle is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Wintrust Financial Corp and Pinnacle Financial Partners in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pinnacle 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 Pinnacle Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pinnacle Financial has no effect on the direction of Wintrust Financial i.e., Wintrust Financial and Pinnacle Financial go up and down completely randomly.
Pair Corralation between Wintrust Financial and Pinnacle Financial
Assuming the 90 days horizon Wintrust Financial is expected to generate 3.67 times less return on investment than Pinnacle Financial. But when comparing it to its historical volatility, Wintrust Financial Corp is 3.68 times less risky than Pinnacle Financial. It trades about 0.1 of its potential returns per unit of risk. Pinnacle Financial Partners is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 2,447 in Pinnacle Financial Partners on August 26, 2024 and sell it today you would earn a total of 28.00 from holding Pinnacle Financial Partners or generate 1.14% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Wintrust Financial Corp vs. Pinnacle Financial Partners
Performance |
| Timeline |
| Wintrust Financial Corp |
| Pinnacle Financial |
Wintrust Financial and Pinnacle Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Wintrust Financial and Pinnacle Financial
The main advantage of trading using opposite Wintrust Financial and Pinnacle Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wintrust Financial position performs unexpectedly, Pinnacle 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 Pinnacle Financial will offset losses from the drop in Pinnacle Financial's long position.| Wintrust Financial vs. Capital One Financial | Wintrust Financial vs. Capital One Financial | Wintrust Financial vs. Bank of America | Wintrust Financial vs. KeyCorp |
| Pinnacle Financial vs. OceanFirst Financial Corp | Pinnacle Financial vs. Heartland Financial USA | Pinnacle Financial vs. Wintrust Financial Corp | Pinnacle Financial vs. Dime Community 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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