Correlation Between Byline Bancorp and MidWestOne Financial
Can any of the company-specific risk be diversified away by investing in both Byline Bancorp and MidWestOne 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 MidWestOne 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 MidWestOne Financial Group, you can compare the effects of market volatilities on Byline Bancorp and MidWestOne 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 MidWestOne Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Byline Bancorp and MidWestOne Financial.
Diversification Opportunities for Byline Bancorp and MidWestOne Financial
0.93 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Byline and MidWestOne is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Byline Bancorp and MidWestOne Financial Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MidWestOne 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 MidWestOne Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MidWestOne Financial has no effect on the direction of Byline Bancorp i.e., Byline Bancorp and MidWestOne Financial go up and down completely randomly.
Pair Corralation between Byline Bancorp and MidWestOne Financial
Allowing for the 90-day total investment horizon Byline Bancorp is expected to under-perform the MidWestOne Financial. But the stock apears to be less risky and, when comparing its historical volatility, Byline Bancorp is 1.04 times less risky than MidWestOne Financial. The stock trades about -0.09 of its potential returns per unit of risk. The MidWestOne Financial Group is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 3,010 in MidWestOne Financial Group on October 21, 2024 and sell it today you would earn a total of 13.00 from holding MidWestOne Financial Group or generate 0.43% 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. MidWestOne Financial Group
Performance |
| Timeline |
| Byline Bancorp |
| MidWestOne Financial |
Byline Bancorp and MidWestOne Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Byline Bancorp and MidWestOne Financial
The main advantage of trading using opposite Byline Bancorp and MidWestOne Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Byline Bancorp position performs unexpectedly, MidWestOne 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 MidWestOne Financial will offset losses from the drop in MidWestOne Financial's long position.| Byline Bancorp vs. Affinity Bancshares | Byline Bancorp vs. Home Federal Bancorp | Byline Bancorp vs. LINKBANCORP | Byline Bancorp vs. Bankwell Financial Group |
| MidWestOne Financial vs. Home Federal Bancorp | MidWestOne Financial vs. Lake Shore Bancorp | MidWestOne Financial vs. Community West Bancshares | MidWestOne Financial vs. First Northwest 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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