Correlation Between Byline Bancorp and CF Financial
Can any of the company-specific risk be diversified away by investing in both Byline Bancorp and CF 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 Byline Bancorp and CF Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Byline Bancorp and CF Financial, you can compare the effects of market volatilities on Byline Bancorp and CF 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 Byline Bancorp with a short position of CF Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Byline Bancorp and CF Financial.
Diversification Opportunities for Byline Bancorp and CF Financial
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Byline and CFFI is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Byline Bancorp and CF Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CF Financial 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 CF Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CF Financial has no effect on the direction of Byline Bancorp i.e., Byline Bancorp and CF Financial go up and down completely randomly.
Pair Corralation between Byline Bancorp and CF Financial
Allowing for the 90-day total investment horizon Byline Bancorp is expected to generate 1.69 times less return on investment than CF Financial. In addition to that, Byline Bancorp is 1.31 times more volatile than CF Financial. It trades about 0.17 of its total potential returns per unit of risk. CF Financial is currently generating about 0.39 per unit of volatility. If you would invest 6,178 in CF Financial on August 28, 2024 and sell it today you would earn a total of 1,715 from holding CF Financial or generate 27.76% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Byline Bancorp vs. CF Financial
Performance |
| Timeline |
| Byline Bancorp |
| CF Financial |
Byline Bancorp and CF Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Byline Bancorp and CF Financial
The main advantage of trading using opposite Byline Bancorp and CF Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Byline Bancorp position performs unexpectedly, CF 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 CF Financial will offset losses from the drop in CF Financial's long position.| Byline Bancorp vs. Fifth Third Bancorp | Byline Bancorp vs. Huntington Bancshares Incorporated | Byline Bancorp vs. MT Bank |
| CF Financial vs. Fifth Third Bancorp | CF Financial vs. Huntington Bancshares Incorporated | CF Financial vs. MT Bank |
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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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