Correlation Between Huntington Bancshares and Wintrust Financial

Can any of the company-specific risk be diversified away by investing in both Huntington Bancshares 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 Huntington Bancshares and Wintrust Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Huntington Bancshares Incorporated and Wintrust Financial, you can compare the effects of market volatilities on Huntington Bancshares 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 Huntington Bancshares with a short position of Wintrust Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Huntington Bancshares and Wintrust Financial.

Diversification Opportunities for Huntington Bancshares and Wintrust Financial

-0.2

Correlation Coefficient

Huntington Bancshares  Wintrust Financial

Good diversification

The 3 months correlation between Huntington and Wintrust is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding Huntington Bancshares Incorpor and Wintrust Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wintrust Financial and Huntington Bancshares 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 Huntington Bancshares Incorporated 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 Huntington Bancshares i.e., Huntington Bancshares and Wintrust Financial go up and down completely randomly.

Pair Corralation between Huntington Bancshares and Wintrust Financial

Assuming the 90 days horizon Huntington Bancshares Incorporated is expected to under-perform the Wintrust Financial. But the preferred stock apears to be less risky and, when comparing its historical volatility, Huntington Bancshares Incorporated is 2.78 times less risky than Wintrust Financial. The preferred stock trades about -0.04 of its potential returns per unit of risk. The Wintrust Financial is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest  10,621  in Wintrust Financial on September 14, 2024 and sell it today you would earn a total of  2,694  from holding Wintrust Financial or generate 25.36% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Huntington Bancshares Incorpor  vs.  Wintrust Financial

Huntington Bancshares

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Huntington Bancshares Incorporated has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Huntington Bancshares is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Wintrust Financial

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Wintrust Financial are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady technical and fundamental indicators, Wintrust Financial exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Huntington Bancshares and Wintrust Financial

The main advantage of trading using opposite Huntington Bancshares and Wintrust Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Huntington Bancshares 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.

The idea behind Huntington Bancshares Incorporated and Wintrust Financial pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Commodity Directory module to find actively traded commodities issued by global exchanges.