Correlation Between Byline Bancorp and Merchants Bancorp
Can any of the company-specific risk be diversified away by investing in both Byline Bancorp and Merchants 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 Merchants 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 Merchants Bancorp, you can compare the effects of market volatilities on Byline Bancorp and Merchants 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 Merchants Bancorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Byline Bancorp and Merchants Bancorp.
Diversification Opportunities for Byline Bancorp and Merchants Bancorp
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Byline and Merchants is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Byline Bancorp and Merchants Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Merchants 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 Merchants Bancorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Merchants Bancorp has no effect on the direction of Byline Bancorp i.e., Byline Bancorp and Merchants Bancorp go up and down completely randomly.
Pair Corralation between Byline Bancorp and Merchants Bancorp
Allowing for the 90-day total investment horizon Byline Bancorp is expected to under-perform the Merchants Bancorp. In addition to that, Byline Bancorp is 14.0 times more volatile than Merchants Bancorp. It trades about -0.14 of its total potential returns per unit of risk. Merchants Bancorp is currently generating about 0.53 per unit of volatility. If you would invest 2,531 in Merchants Bancorp on September 12, 2024 and sell it today you would earn a total of 17.00 from holding Merchants Bancorp or generate 0.67% 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. Merchants Bancorp
Performance |
| Timeline |
| Byline Bancorp |
| Merchants Bancorp |
Byline Bancorp and Merchants Bancorp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Byline Bancorp and Merchants Bancorp
The main advantage of trading using opposite Byline Bancorp and Merchants Bancorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Byline Bancorp position performs unexpectedly, Merchants 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 Merchants Bancorp will offset losses from the drop in Merchants 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 |
| Merchants Bancorp vs. Medallion Bank PR | Merchants Bancorp vs. Northern Trust | Merchants Bancorp vs. Valley National Bancorp | Merchants Bancorp vs. Valley National 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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