Correlation Between Byline Bancorp and West Bancorporation
Can any of the company-specific risk be diversified away by investing in both Byline Bancorp and West Bancorporation 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 West Bancorporation into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Byline Bancorp and West Bancorporation, you can compare the effects of market volatilities on Byline Bancorp and West Bancorporation 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 West Bancorporation. Check out your portfolio center. Please also check ongoing floating volatility patterns of Byline Bancorp and West Bancorporation.
Diversification Opportunities for Byline Bancorp and West Bancorporation
0.94 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Byline and West is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Byline Bancorp and West Bancorp. in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on West Bancorporation 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 West Bancorporation. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of West Bancorporation has no effect on the direction of Byline Bancorp i.e., Byline Bancorp and West Bancorporation go up and down completely randomly.
Pair Corralation between Byline Bancorp and West Bancorporation
Allowing for the 90-day total investment horizon Byline Bancorp is expected to generate 1.15 times less return on investment than West Bancorporation. But when comparing it to its historical volatility, Byline Bancorp is 1.12 times less risky than West Bancorporation. It trades about 0.12 of its potential returns per unit of risk. West Bancorporation is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 1,648 in West Bancorporation on September 1, 2024 and sell it today you would earn a total of 739.00 from holding West Bancorporation or generate 44.84% 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. West Bancorp.
Performance |
| Timeline |
| Byline Bancorp |
| West Bancorporation |
Byline Bancorp and West Bancorporation Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Byline Bancorp and West Bancorporation
The main advantage of trading using opposite Byline Bancorp and West Bancorporation positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Byline Bancorp position performs unexpectedly, West Bancorporation 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 West Bancorporation will offset losses from the drop in West Bancorporation's long position.| Byline Bancorp vs. Affinity Bancshares | Byline Bancorp vs. Home Federal Bancorp | Byline Bancorp vs. LINKBANCORP | Byline Bancorp vs. Bankwell Financial Group |
| West Bancorporation vs. MidWestOne Financial Group | West Bancorporation vs. Washington Trust Bancorp | West Bancorporation vs. Univest Pennsylvania | West Bancorporation vs. Sierra 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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