Correlation Between VersaBank and Byline Bancorp
Can any of the company-specific risk be diversified away by investing in both VersaBank 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 VersaBank and Byline Bancorp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between VersaBank and Byline Bancorp, you can compare the effects of market volatilities on VersaBank 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 VersaBank with a short position of Byline Bancorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of VersaBank and Byline Bancorp.
Diversification Opportunities for VersaBank and Byline Bancorp
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between VersaBank and Byline is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding VersaBank and Byline Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Byline Bancorp and VersaBank 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 VersaBank 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 VersaBank i.e., VersaBank and Byline Bancorp go up and down completely randomly.
Pair Corralation between VersaBank and Byline Bancorp
Given the investment horizon of 90 days VersaBank is expected to generate 0.51 times more return on investment than Byline Bancorp. However, VersaBank is 1.96 times less risky than Byline Bancorp. It trades about 0.44 of its potential returns per unit of risk. Byline Bancorp is currently generating about 0.16 per unit of risk. If you would invest 1,475 in VersaBank on August 29, 2024 and sell it today you would earn a total of 319.00 from holding VersaBank or generate 21.63% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
VersaBank vs. Byline Bancorp
Performance |
| Timeline |
| VersaBank |
| Byline Bancorp |
VersaBank and Byline Bancorp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with VersaBank and Byline Bancorp
The main advantage of trading using opposite VersaBank and Byline Bancorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if VersaBank 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.| VersaBank vs. Mountain Commerce Bancorp | VersaBank vs. American Riviera Bank | VersaBank vs. Home Federal Bancorp | VersaBank vs. Prime Meridian Holding |
| 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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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