Correlation Between Preferred Bank and Wintrust Financial
Can any of the company-specific risk be diversified away by investing in both Preferred Bank 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 Preferred Bank and Wintrust Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Preferred Bank and Wintrust Financial, you can compare the effects of market volatilities on Preferred Bank 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 Preferred Bank with a short position of Wintrust Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Preferred Bank and Wintrust Financial.
Diversification Opportunities for Preferred Bank and Wintrust Financial
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Preferred and Wintrust is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Preferred Bank and Wintrust Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wintrust Financial and Preferred Bank 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 Preferred Bank 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 has no effect on the direction of Preferred Bank i.e., Preferred Bank and Wintrust Financial go up and down completely randomly.
Pair Corralation between Preferred Bank and Wintrust Financial
Given the investment horizon of 90 days Preferred Bank is expected to generate 0.82 times more return on investment than Wintrust Financial. However, Preferred Bank is 1.22 times less risky than Wintrust Financial. It trades about 0.0 of its potential returns per unit of risk. Wintrust Financial is currently generating about -0.01 per unit of risk. If you would invest 9,323 in Preferred Bank on August 25, 2025 and sell it today you would lose (33.00) from holding Preferred Bank or give up 0.35% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Preferred Bank vs. Wintrust Financial
Performance |
| Timeline |
| Preferred Bank |
| Wintrust Financial |
Preferred Bank and Wintrust Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Preferred Bank and Wintrust Financial
The main advantage of trading using opposite Preferred Bank and Wintrust Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Preferred Bank 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.| Preferred Bank vs. Westamerica Bancorporation | Preferred Bank vs. ConnectOne Bancorp | Preferred Bank vs. QCR Holdings | Preferred Bank vs. CullenFrost Bankers |
| Wintrust Financial vs. Old National Bancorp | Wintrust Financial vs. UMB Financial | Wintrust Financial vs. Western Alliance Bancorporation | Wintrust Financial vs. Popular |
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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