Correlation Between Byline Bancorp and First Commonwealth
Can any of the company-specific risk be diversified away by investing in both Byline Bancorp and First Commonwealth 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 Commonwealth 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 Commonwealth Financial, you can compare the effects of market volatilities on Byline Bancorp and First Commonwealth 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 Commonwealth. Check out your portfolio center. Please also check ongoing floating volatility patterns of Byline Bancorp and First Commonwealth.
Diversification Opportunities for Byline Bancorp and First Commonwealth
0.9 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Byline and First is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Byline Bancorp and First Commonwealth Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Commonwealth 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 Commonwealth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Commonwealth has no effect on the direction of Byline Bancorp i.e., Byline Bancorp and First Commonwealth go up and down completely randomly.
Pair Corralation between Byline Bancorp and First Commonwealth
Allowing for the 90-day total investment horizon Byline Bancorp is expected to generate 1.01 times more return on investment than First Commonwealth. However, Byline Bancorp is 1.01 times more volatile than First Commonwealth Financial. It trades about 0.05 of its potential returns per unit of risk. First Commonwealth Financial is currently generating about 0.01 per unit of risk. If you would invest 2,678 in Byline Bancorp on October 25, 2024 and sell it today you would earn a total of 156.00 from holding Byline Bancorp or generate 5.83% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Byline Bancorp vs. First Commonwealth Financial
Performance |
| Timeline |
| Byline Bancorp |
| First Commonwealth |
Byline Bancorp and First Commonwealth Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Byline Bancorp and First Commonwealth
The main advantage of trading using opposite Byline Bancorp and First Commonwealth positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Byline Bancorp position performs unexpectedly, First Commonwealth 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 Commonwealth will offset losses from the drop in First Commonwealth'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 Commonwealth vs. Great Southern Bancorp | First Commonwealth vs. Heritage Financial | First Commonwealth vs. Finward Bancorp | First Commonwealth vs. QCR Holdings |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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