Correlation Between Byline Bancorp and Prosperity Bancshares
Can any of the company-specific risk be diversified away by investing in both Byline Bancorp and Prosperity 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 Prosperity 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 Prosperity Bancshares, you can compare the effects of market volatilities on Byline Bancorp and Prosperity 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 Prosperity Bancshares. Check out your portfolio center. Please also check ongoing floating volatility patterns of Byline Bancorp and Prosperity Bancshares.
Diversification Opportunities for Byline Bancorp and Prosperity Bancshares
0.96 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Byline and Prosperity is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding Byline Bancorp and Prosperity Bancshares in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Prosperity 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 Prosperity Bancshares. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Prosperity Bancshares has no effect on the direction of Byline Bancorp i.e., Byline Bancorp and Prosperity Bancshares go up and down completely randomly.
Pair Corralation between Byline Bancorp and Prosperity Bancshares
Allowing for the 90-day total investment horizon Byline Bancorp is expected to generate 1.17 times more return on investment than Prosperity Bancshares. However, Byline Bancorp is 1.17 times more volatile than Prosperity Bancshares. It trades about 0.04 of its potential returns per unit of risk. Prosperity Bancshares is currently generating about 0.03 per unit of risk. If you would invest 2,195 in Byline Bancorp on August 23, 2024 and sell it today you would earn a total of 898.00 from holding Byline Bancorp or generate 40.91% 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. Prosperity Bancshares
Performance |
| Timeline |
| Byline Bancorp |
| Prosperity Bancshares |
Byline Bancorp and Prosperity Bancshares Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Byline Bancorp and Prosperity Bancshares
The main advantage of trading using opposite Byline Bancorp and Prosperity Bancshares positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Byline Bancorp position performs unexpectedly, Prosperity 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 Prosperity Bancshares will offset losses from the drop in Prosperity Bancshares' long position.| Byline Bancorp vs. Affinity Bancshares | Byline Bancorp vs. Home Federal Bancorp | Byline Bancorp vs. LINKBANCORP | Byline Bancorp vs. Bankwell Financial Group |
| Prosperity Bancshares vs. Heartland Financial USA | Prosperity Bancshares vs. Heritage Commerce Corp | Prosperity Bancshares vs. Business First Bancshares | Prosperity Bancshares vs. German American 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 Global Correlations module to find global opportunities by holding instruments from different markets.
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