Correlation Between First Financial and Byline Bancorp
Can any of the company-specific risk be diversified away by investing in both First Financial and Byline Bancorp 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 First Financial and Byline Bancorp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between First Financial Bankshares and Byline Bancorp, you can compare the effects of market volatilities on First Financial and Byline Bancorp 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 First Financial with a short position of Byline Bancorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Financial and Byline Bancorp.
Diversification Opportunities for First Financial and Byline Bancorp
0.9 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between First and Byline is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding First Financial Bankshares and Byline Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Byline Bancorp and First Financial 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 First Financial Bankshares are associated (or correlated) with Byline Bancorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Byline Bancorp has no effect on the direction of First Financial i.e., First Financial and Byline Bancorp go up and down completely randomly.
Pair Corralation between First Financial and Byline Bancorp
Given the investment horizon of 90 days First Financial Bankshares is expected to generate 0.86 times more return on investment than Byline Bancorp. However, First Financial Bankshares is 1.16 times less risky than Byline Bancorp. It trades about 0.23 of its potential returns per unit of risk. Byline Bancorp is currently generating about 0.19 per unit of risk. If you would invest 3,681 in First Financial Bankshares on August 28, 2024 and sell it today you would earn a total of 624.00 from holding First Financial Bankshares or generate 16.95% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
First Financial Bankshares vs. Byline Bancorp
Performance |
| Timeline |
| First Financial Bank |
| Byline Bancorp |
First Financial and Byline Bancorp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Financial and Byline Bancorp
The main advantage of trading using opposite First Financial and Byline Bancorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Financial position performs unexpectedly, Byline Bancorp 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 Byline Bancorp will offset losses from the drop in Byline Bancorp's long position.| First Financial vs. Fifth Third Bancorp | First Financial vs. Zions Bancorporation | First Financial vs. Huntington Bancshares Incorporated | First Financial vs. Comerica |
| Byline Bancorp vs. Affinity Bancshares | Byline Bancorp vs. Home Federal Bancorp | Byline Bancorp vs. LINKBANCORP | Byline Bancorp vs. Bankwell Financial Group |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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