Correlation Between Midland States and Wintrust Financial

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

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

Diversification Opportunities for Midland States and Wintrust Financial

0.56

Correlation Coefficient

Midland States  Wintrust Financial

Very weak diversification

The 3 months correlation between Midland and Wintrust is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Midland States Bancorp and Wintrust Financial Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wintrust Financial Corp and Midland States 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 Midland States Bancorp 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 Corp has no effect on the direction of Midland States i.e., Midland States and Wintrust Financial go up and down completely randomly.

Pair Corralation between Midland States and Wintrust Financial

Assuming the 90 days horizon Midland States Bancorp is expected to generate 2.22 times more return on investment than Wintrust Financial. However, Midland States is 2.22 times more volatile than Wintrust Financial Corp. It trades about 0.06 of its potential returns per unit of risk. Wintrust Financial Corp is currently generating about 0.11 per unit of risk. If you would invest  2,273  in Midland States Bancorp on September 14, 2024 and sell it today you would earn a total of  240.00  from holding Midland States Bancorp or generate 10.56% return on investment over 90 days.

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

Midland States Bancorp  vs.  Wintrust Financial Corp

Midland States Bancorp

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Midland States Bancorp are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable forward indicators, Midland States is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Wintrust Financial Corp

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Wintrust Financial Corp are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable fundamental indicators, Wintrust Financial is not utilizing all of its potentials. The recent stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Midland States and Wintrust Financial

The main advantage of trading using opposite Midland States and Wintrust Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Midland States 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 Midland States Bancorp and Wintrust Financial Corp 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.