Correlation Between Byline Bancorp and Bank of Botetourt
Can any of the company-specific risk be diversified away by investing in both Byline Bancorp and Bank of Botetourt 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 Bank of Botetourt into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Byline Bancorp and Bank of Botetourt, you can compare the effects of market volatilities on Byline Bancorp and Bank of Botetourt 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 Bank of Botetourt. Check out your portfolio center. Please also check ongoing floating volatility patterns of Byline Bancorp and Bank of Botetourt.
Diversification Opportunities for Byline Bancorp and Bank of Botetourt
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Byline and Bank is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Byline Bancorp and Bank of Botetourt in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bank of Botetourt 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 Bank of Botetourt. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bank of Botetourt has no effect on the direction of Byline Bancorp i.e., Byline Bancorp and Bank of Botetourt go up and down completely randomly.
Pair Corralation between Byline Bancorp and Bank of Botetourt
Allowing for the 90-day total investment horizon Byline Bancorp is expected to generate 6.5 times more return on investment than Bank of Botetourt. However, Byline Bancorp is 6.5 times more volatile than Bank of Botetourt. It trades about 0.21 of its potential returns per unit of risk. Bank of Botetourt is currently generating about 0.19 per unit of risk. If you would invest 2,682 in Byline Bancorp on September 1, 2024 and sell it today you would earn a total of 460.00 from holding Byline Bancorp or generate 17.15% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Byline Bancorp vs. Bank of Botetourt
Performance |
| Timeline |
| Byline Bancorp |
| Bank of Botetourt |
Byline Bancorp and Bank of Botetourt Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Byline Bancorp and Bank of Botetourt
The main advantage of trading using opposite Byline Bancorp and Bank of Botetourt positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Byline Bancorp position performs unexpectedly, Bank of Botetourt 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 Bank of Botetourt will offset losses from the drop in Bank of Botetourt's long position.| Byline Bancorp vs. Affinity Bancshares | Byline Bancorp vs. Home Federal Bancorp | Byline Bancorp vs. LINKBANCORP | Byline Bancorp vs. Bankwell Financial Group |
| Bank of Botetourt vs. Century Financial Corp | Bank of Botetourt vs. FS Bancorp | Bank of Botetourt vs. Lyons Bancorp | Bank of Botetourt vs. Solvay Bank Corp |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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