Correlation Between Bridgewater Bancshares and Byline Bancorp
Can any of the company-specific risk be diversified away by investing in both Bridgewater Bancshares 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 Bridgewater Bancshares and Byline Bancorp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bridgewater Bancshares and Byline Bancorp, you can compare the effects of market volatilities on Bridgewater Bancshares 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 Bridgewater Bancshares with a short position of Byline Bancorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bridgewater Bancshares and Byline Bancorp.
Diversification Opportunities for Bridgewater Bancshares and Byline Bancorp
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Bridgewater and Byline is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Bridgewater Bancshares and Byline Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Byline Bancorp and Bridgewater Bancshares 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 Bridgewater Bancshares 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 Bridgewater Bancshares i.e., Bridgewater Bancshares and Byline Bancorp go up and down completely randomly.
Pair Corralation between Bridgewater Bancshares and Byline Bancorp
Considering the 90-day investment horizon Bridgewater Bancshares is expected to under-perform the Byline Bancorp. In addition to that, Bridgewater Bancshares is 1.25 times more volatile than Byline Bancorp. It trades about -0.01 of its total potential returns per unit of risk. Byline Bancorp is currently generating about 0.0 per unit of volatility. If you would invest 2,290 in Byline Bancorp on January 26, 2024 and sell it today you would lose (147.00) from holding Byline Bancorp or give up 6.42% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Strong |
Accuracy | 100.0% |
Values | Daily Returns |
Bridgewater Bancshares vs. Byline Bancorp
Performance |
Timeline |
Bridgewater Bancshares |
Byline Bancorp |
Bridgewater Bancshares and Byline Bancorp Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Bridgewater Bancshares and Byline Bancorp
The main advantage of trading using opposite Bridgewater Bancshares and Byline Bancorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bridgewater Bancshares 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.Bridgewater Bancshares vs. Community West Bancshares | Bridgewater Bancshares vs. First Northwest Bancorp | Bridgewater Bancshares vs. Cullman Bancorp | Bridgewater Bancshares vs. Investar Holding Corp |
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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