Correlation Between Byline Bancorp and Northwest Bancshares
Can any of the company-specific risk be diversified away by investing in both Byline Bancorp and Northwest Bancshares 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 Northwest Bancshares into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Byline Bancorp and Northwest Bancshares, you can compare the effects of market volatilities on Byline Bancorp and Northwest Bancshares 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 Northwest Bancshares. Check out your portfolio center. Please also check ongoing floating volatility patterns of Byline Bancorp and Northwest Bancshares.
Diversification Opportunities for Byline Bancorp and Northwest Bancshares
0.98 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Byline and Northwest is 0.98. Overlapping area represents the amount of risk that can be diversified away by holding Byline Bancorp and Northwest Bancshares in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Northwest Bancshares 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 Northwest Bancshares. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Northwest Bancshares has no effect on the direction of Byline Bancorp i.e., Byline Bancorp and Northwest Bancshares go up and down completely randomly.
Pair Corralation between Byline Bancorp and Northwest Bancshares
Allowing for the 90-day total investment horizon Byline Bancorp is expected to generate 1.19 times more return on investment than Northwest Bancshares. However, Byline Bancorp is 1.19 times more volatile than Northwest Bancshares. It trades about 0.17 of its potential returns per unit of risk. Northwest Bancshares is currently generating about 0.16 per unit of risk. If you would invest 2,775 in Byline Bancorp on August 29, 2024 and sell it today you would earn a total of 402.00 from holding Byline Bancorp or generate 14.49% 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. Northwest Bancshares
Performance |
| Timeline |
| Byline Bancorp |
| Northwest Bancshares |
Byline Bancorp and Northwest Bancshares Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Byline Bancorp and Northwest Bancshares
The main advantage of trading using opposite Byline Bancorp and Northwest Bancshares positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Byline Bancorp position performs unexpectedly, Northwest Bancshares 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 Northwest Bancshares will offset losses from the drop in Northwest Bancshares' long position.| Byline Bancorp vs. Fifth Third Bancorp | Byline Bancorp vs. Huntington Bancshares Incorporated | Byline Bancorp vs. MT Bank |
| Northwest Bancshares vs. ST Bancorp | Northwest Bancshares vs. CrossFirst Bankshares | Northwest Bancshares vs. Enterprise Financial Services | Northwest Bancshares vs. The First Bancshares, |
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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