Correlation Between Byline Bancorp and Preferred Bank
Can any of the company-specific risk be diversified away by investing in both Byline Bancorp and Preferred Bank 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 Preferred Bank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Byline Bancorp and Preferred Bank, you can compare the effects of market volatilities on Byline Bancorp and Preferred Bank 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 Preferred Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Byline Bancorp and Preferred Bank.
Diversification Opportunities for Byline Bancorp and Preferred Bank
0.95 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Byline and Preferred is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding Byline Bancorp and Preferred Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Preferred Bank 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 Preferred Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Preferred Bank has no effect on the direction of Byline Bancorp i.e., Byline Bancorp and Preferred Bank go up and down completely randomly.
Pair Corralation between Byline Bancorp and Preferred Bank
Allowing for the 90-day total investment horizon Byline Bancorp is expected to generate 1.28 times more return on investment than Preferred Bank. However, Byline Bancorp is 1.28 times more volatile than Preferred Bank. It trades about 0.18 of its potential returns per unit of risk. Preferred Bank is currently generating about 0.19 per unit of risk. If you would invest 2,733 in Byline Bancorp on August 30, 2024 and sell it today you would earn a total of 419.00 from holding Byline Bancorp or generate 15.33% 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. Preferred Bank
Performance |
| Timeline |
| Byline Bancorp |
| Preferred Bank |
Byline Bancorp and Preferred Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Byline Bancorp and Preferred Bank
The main advantage of trading using opposite Byline Bancorp and Preferred Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Byline Bancorp position performs unexpectedly, Preferred Bank 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 Preferred Bank will offset losses from the drop in Preferred Bank's long position.| Byline Bancorp vs. Affinity Bancshares | Byline Bancorp vs. Home Federal Bancorp | Byline Bancorp vs. LINKBANCORP | Byline Bancorp vs. Bankwell Financial Group |
| Preferred Bank vs. Pacific Premier Bancorp | Preferred Bank vs. Heritage Financial | Preferred Bank vs. QCR Holdings | Preferred Bank vs. Lakeland Financial |
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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