Correlation Between Wintrust Financial and First Guaranty

Can any of the company-specific risk be diversified away by investing in both Wintrust Financial and First Guaranty 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 First Guaranty 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 First Guaranty Bancshares, you can compare the effects of market volatilities on Wintrust Financial and First Guaranty 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 First Guaranty. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wintrust Financial and First Guaranty.

Diversification Opportunities for Wintrust Financial and First Guaranty

0.72

Correlation Coefficient

Wintrust Financial  First Guaranty

Poor diversification

The 3 months correlation between Wintrust and First is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Wintrust Financial Corp and First Guaranty Bancshares in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Guaranty Bancshares 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 First Guaranty. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Guaranty Bancshares has no effect on the direction of Wintrust Financial i.e., Wintrust Financial and First Guaranty go up and down completely randomly.

Pair Corralation between Wintrust Financial and First Guaranty

Assuming the 90 days horizon Wintrust Financial Corp is expected to generate 0.06 times more return on investment than First Guaranty. However, Wintrust Financial Corp is 17.96 times less risky than First Guaranty. It trades about 0.62 of its potential returns per unit of risk. First Guaranty Bancshares is currently generating about -0.03 per unit of risk. If you would invest  2,473  in Wintrust Financial Corp on May 17, 2025 and sell it today you would earn a total of  27.00  from holding Wintrust Financial Corp or generate 1.09% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	72.58%
Values	Daily Returns

Wintrust Financial Corp  vs.  First Guaranty Bancshares

Wintrust Financial Corp

Risk-Adjusted Performance

Prime

Over the last 90 days Wintrust Financial Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable fundamental indicators, Wintrust Financial is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

First Guaranty Bancshares

Risk-Adjusted Performance

Weakest

Over the last 90 days First Guaranty Bancshares has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable forward indicators, First Guaranty is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Wintrust Financial and First Guaranty

The main advantage of trading using opposite Wintrust Financial and First Guaranty positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wintrust Financial position performs unexpectedly, First Guaranty 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 First Guaranty will offset losses from the drop in First Guaranty's long position.

The idea behind Wintrust Financial Corp and First Guaranty Bancshares 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.