Correlation Between Byline Bancorp and Northeast Bancorp
Can any of the company-specific risk be diversified away by investing in both Byline Bancorp and Northeast 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 Northeast 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 Northeast Bancorp, you can compare the effects of market volatilities on Byline Bancorp and Northeast 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 Northeast Bancorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Byline Bancorp and Northeast Bancorp.
Diversification Opportunities for Byline Bancorp and Northeast Bancorp
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Byline and Northeast is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Byline Bancorp and Northeast Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Northeast 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 Northeast Bancorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Northeast Bancorp has no effect on the direction of Byline Bancorp i.e., Byline Bancorp and Northeast Bancorp go up and down completely randomly.
Pair Corralation between Byline Bancorp and Northeast Bancorp
Allowing for the 90-day total investment horizon Byline Bancorp is expected to under-perform the Northeast Bancorp. But the stock apears to be less risky and, when comparing its historical volatility, Byline Bancorp is 1.19 times less risky than Northeast Bancorp. The stock trades about -0.08 of its potential returns per unit of risk. The Northeast Bancorp is currently generating about 0.31 of returns per unit of risk over similar time horizon. If you would invest 9,187 in Northeast Bancorp on October 22, 2024 and sell it today you would earn a total of 903.00 from holding Northeast Bancorp or generate 9.83% 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. Northeast Bancorp
Performance |
| Timeline |
| Byline Bancorp |
| Northeast Bancorp |
Byline Bancorp and Northeast Bancorp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Byline Bancorp and Northeast Bancorp
The main advantage of trading using opposite Byline Bancorp and Northeast Bancorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Byline Bancorp position performs unexpectedly, Northeast 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 Northeast Bancorp will offset losses from the drop in Northeast 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 |
| Northeast Bancorp vs. Home Federal Bancorp | Northeast Bancorp vs. Mainstreet Bank | Northeast Bancorp vs. Investar Holding Corp | Northeast Bancorp vs. Magyar 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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