Correlation Between Byline Bancorp and Federal Agricultural
Can any of the company-specific risk be diversified away by investing in both Byline Bancorp and Federal Agricultural 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 Byline Bancorp and Federal Agricultural into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Byline Bancorp and Federal Agricultural Mortgage, you can compare the effects of market volatilities on Byline Bancorp and Federal Agricultural 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 Byline Bancorp with a short position of Federal Agricultural. Check out your portfolio center. Please also check ongoing floating volatility patterns of Byline Bancorp and Federal Agricultural.
Diversification Opportunities for Byline Bancorp and Federal Agricultural
-0.74 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Byline and Federal is -0.74. Overlapping area represents the amount of risk that can be diversified away by holding Byline Bancorp and Federal Agricultural Mortgage in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Federal Agricultural and Byline Bancorp 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 Byline Bancorp are associated (or correlated) with Federal Agricultural. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Federal Agricultural has no effect on the direction of Byline Bancorp i.e., Byline Bancorp and Federal Agricultural go up and down completely randomly.
Pair Corralation between Byline Bancorp and Federal Agricultural
Allowing for the 90-day total investment horizon Byline Bancorp is expected to generate 1.68 times more return on investment than Federal Agricultural. However, Byline Bancorp is 1.68 times more volatile than Federal Agricultural Mortgage. It trades about 0.09 of its potential returns per unit of risk. Federal Agricultural Mortgage is currently generating about 0.02 per unit of risk. If you would invest 1,707 in Byline Bancorp on August 31, 2024 and sell it today you would earn a total of 1,445 from holding Byline Bancorp or generate 84.65% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Byline Bancorp vs. Federal Agricultural Mortgage
Performance |
| Timeline |
| Byline Bancorp |
| Federal Agricultural |
Byline Bancorp and Federal Agricultural Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Byline Bancorp and Federal Agricultural
The main advantage of trading using opposite Byline Bancorp and Federal Agricultural positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Byline Bancorp position performs unexpectedly, Federal Agricultural 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 Federal Agricultural will offset losses from the drop in Federal Agricultural's long position.| Byline Bancorp vs. Affinity Bancshares | Byline Bancorp vs. Home Federal Bancorp | Byline Bancorp vs. LINKBANCORP | Byline Bancorp vs. Bankwell Financial Group |
| Federal Agricultural vs. Federal Agricultural Mortgage | Federal Agricultural vs. Federal Agricultural Mortgage | Federal Agricultural vs. The Allstate |
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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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