Correlation Between Byline Bancorp and First Bancorp
Can any of the company-specific risk be diversified away by investing in both Byline Bancorp and First Bancorp 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 First Bancorp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Byline Bancorp and First Bancorp, you can compare the effects of market volatilities on Byline Bancorp and First Bancorp 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 First Bancorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Byline Bancorp and First Bancorp.
Diversification Opportunities for Byline Bancorp and First Bancorp
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Byline and First is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Byline Bancorp and First Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Bancorp 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 First Bancorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Bancorp has no effect on the direction of Byline Bancorp i.e., Byline Bancorp and First Bancorp go up and down completely randomly.
Pair Corralation between Byline Bancorp and First Bancorp
Allowing for the 90-day total investment horizon Byline Bancorp is expected to generate 1.05 times less return on investment than First Bancorp. In addition to that, Byline Bancorp is 1.15 times more volatile than First Bancorp. It trades about 0.1 of its total potential returns per unit of risk. First Bancorp is currently generating about 0.12 per unit of volatility. If you would invest 4,170 in First Bancorp on August 28, 2024 and sell it today you would earn a total of 750.00 from holding First Bancorp or generate 17.99% 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. First Bancorp
Performance |
| Timeline |
| Byline Bancorp |
| First Bancorp |
Byline Bancorp and First Bancorp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Byline Bancorp and First Bancorp
The main advantage of trading using opposite Byline Bancorp and First Bancorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Byline Bancorp position performs unexpectedly, First Bancorp 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 Bancorp will offset losses from the drop in First Bancorp's long position.| Byline Bancorp vs. Affinity Bancshares | Byline Bancorp vs. Home Federal Bancorp | Byline Bancorp vs. LINKBANCORP | Byline Bancorp vs. Bankwell Financial Group |
| First Bancorp vs. Home Bancorp | First Bancorp vs. First Business Financial | First Bancorp vs. LINKBANCORP | First Bancorp vs. Great Southern Bancorp |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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