Correlation Between Byline Bancorp and Orrstown Financial
Can any of the company-specific risk be diversified away by investing in both Byline Bancorp and Orrstown 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 Orrstown 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 Orrstown Financial Services, you can compare the effects of market volatilities on Byline Bancorp and Orrstown 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 Orrstown Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Byline Bancorp and Orrstown Financial.
Diversification Opportunities for Byline Bancorp and Orrstown Financial
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Byline and Orrstown is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Byline Bancorp and Orrstown Financial Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Orrstown 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 Orrstown Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Orrstown Financial has no effect on the direction of Byline Bancorp i.e., Byline Bancorp and Orrstown Financial go up and down completely randomly.
Pair Corralation between Byline Bancorp and Orrstown Financial
Allowing for the 90-day total investment horizon Byline Bancorp is expected to under-perform the Orrstown Financial. But the stock apears to be less risky and, when comparing its historical volatility, Byline Bancorp is 1.0 times less risky than Orrstown Financial. The stock trades about -0.08 of its potential returns per unit of risk. The Orrstown Financial Services is currently generating about -0.04 of returns per unit of risk over similar time horizon. If you would invest 3,651 in Orrstown Financial Services on October 22, 2024 and sell it today you would lose (45.00) from holding Orrstown Financial Services or give up 1.23% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Byline Bancorp vs. Orrstown Financial Services
Performance |
| Timeline |
| Byline Bancorp |
| Orrstown Financial |
Byline Bancorp and Orrstown Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Byline Bancorp and Orrstown Financial
The main advantage of trading using opposite Byline Bancorp and Orrstown Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Byline Bancorp position performs unexpectedly, Orrstown 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 Orrstown Financial will offset losses from the drop in Orrstown 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 |
| Orrstown Financial vs. Home Federal Bancorp | Orrstown Financial vs. LINKBANCORP | Orrstown Financial vs. Rhinebeck Bancorp | Orrstown Financial vs. Lake Shore 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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