Correlation Between Byline Bancorp and Towne Bank
Can any of the company-specific risk be diversified away by investing in both Byline Bancorp and Towne 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 Towne 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 Towne Bank, you can compare the effects of market volatilities on Byline Bancorp and Towne 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 Towne Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Byline Bancorp and Towne Bank.
Diversification Opportunities for Byline Bancorp and Towne Bank
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Byline and Towne is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Byline Bancorp and Towne Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Towne 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 Towne Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Towne Bank has no effect on the direction of Byline Bancorp i.e., Byline Bancorp and Towne Bank go up and down completely randomly.
Pair Corralation between Byline Bancorp and Towne Bank
Allowing for the 90-day total investment horizon Byline Bancorp is expected to generate 1.36 times more return on investment than Towne Bank. However, Byline Bancorp is 1.36 times more volatile than Towne Bank. It trades about 0.18 of its potential returns per unit of risk. Towne Bank is currently generating about 0.15 per unit of risk. If you would invest 2,775 in Byline Bancorp on August 27, 2024 and sell it today you would earn a total of 419.00 from holding Byline Bancorp or generate 15.1% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Byline Bancorp vs. Towne Bank
Performance |
| Timeline |
| Byline Bancorp |
| Towne Bank |
Byline Bancorp and Towne Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Byline Bancorp and Towne Bank
The main advantage of trading using opposite Byline Bancorp and Towne Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Byline Bancorp position performs unexpectedly, Towne 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 Towne Bank will offset losses from the drop in Towne 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 |
| Towne Bank vs. Penns Woods Bancorp | Towne Bank vs. 1st Source | Towne Bank vs. Great Southern Bancorp | Towne Bank vs. Waterstone 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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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