Correlation Between Wintrust Financial and Texas Capital

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

Diversification Opportunities for Wintrust Financial and Texas Capital

0.27

Correlation Coefficient

Wintrust Financial  Texas Capital

Modest diversification

The 3 months correlation between Wintrust and Texas is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Wintrust Financial Corp and Texas Capital Bancshares in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Texas Capital 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 Texas Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Texas Capital Bancshares has no effect on the direction of Wintrust Financial i.e., Wintrust Financial and Texas Capital go up and down completely randomly.

Pair Corralation between Wintrust Financial and Texas Capital

Assuming the 90 days horizon Wintrust Financial is expected to generate 3.66 times less return on investment than Texas Capital. But when comparing it to its historical volatility, Wintrust Financial Corp is 14.72 times less risky than Texas Capital. It trades about 0.41 of its potential returns per unit of risk. Texas Capital Bancshares is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  1,950  in Texas Capital Bancshares on May 4, 2025 and sell it today you would earn a total of  91.00  from holding Texas Capital Bancshares or generate 4.67% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	87.3%
Values	Daily Returns

Wintrust Financial Corp  vs.  Texas Capital Bancshares

Wintrust Financial Corp

Risk-Adjusted Performance

Very Strong

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 current stock price agitation, may contribute to short-term losses for the retail investors.

Texas Capital Bancshares

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Texas Capital Bancshares are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy forward indicators, Texas Capital is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Wintrust Financial and Texas Capital

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

The idea behind Wintrust Financial Corp and Texas Capital 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.