Correlation Between First Northwest and Byline Bancorp
Can any of the company-specific risk be diversified away by investing in both First Northwest 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 Northwest 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 Northwest Bancorp and Byline Bancorp, you can compare the effects of market volatilities on First Northwest 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 Northwest with a short position of Byline Bancorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Northwest and Byline Bancorp.
Diversification Opportunities for First Northwest and Byline Bancorp
0.16 | Correlation Coefficient |
Average diversification
The 3 months correlation between First and Byline is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding First Northwest Bancorp and Byline Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Byline Bancorp and First Northwest 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 Northwest Bancorp 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 Northwest i.e., First Northwest and Byline Bancorp go up and down completely randomly.
Pair Corralation between First Northwest and Byline Bancorp
Given the investment horizon of 90 days First Northwest is expected to generate 1.04 times less return on investment than Byline Bancorp. But when comparing it to its historical volatility, First Northwest Bancorp is 1.98 times less risky than Byline Bancorp. It trades about 0.33 of its potential returns per unit of risk. Byline Bancorp is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest 2,775 in Byline Bancorp on August 29, 2024 and sell it today you would earn a total of 402.00 from holding Byline Bancorp or generate 14.49% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
First Northwest Bancorp vs. Byline Bancorp
Performance |
| Timeline |
| First Northwest Bancorp |
| Byline Bancorp |
First Northwest and Byline Bancorp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Northwest and Byline Bancorp
The main advantage of trading using opposite First Northwest and Byline Bancorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Northwest 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 Northwest vs. Fifth Third Bancorp | First Northwest vs. Huntington Bancshares Incorporated | First Northwest vs. MT Bank |
| Byline Bancorp vs. Fifth Third Bancorp | Byline Bancorp vs. Huntington Bancshares Incorporated | Byline Bancorp vs. MT Bank |
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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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