Correlation Between Byline Bancorp and Bridgewater Bancshares

Specify exactly 2 symbols:
Can any of the company-specific risk be diversified away by investing in both Byline Bancorp and Bridgewater Bancshares 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 Bridgewater Bancshares into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Byline Bancorp and Bridgewater Bancshares, you can compare the effects of market volatilities on Byline Bancorp and Bridgewater Bancshares 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 Bridgewater Bancshares. Check out your portfolio center. Please also check ongoing floating volatility patterns of Byline Bancorp and Bridgewater Bancshares.

Diversification Opportunities for Byline Bancorp and Bridgewater Bancshares

0.8
  Correlation Coefficient

Very poor diversification

The 3 months correlation between Byline and Bridgewater is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Byline Bancorp and Bridgewater Bancshares in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bridgewater Bancshares 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 Bridgewater Bancshares. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bridgewater Bancshares has no effect on the direction of Byline Bancorp i.e., Byline Bancorp and Bridgewater Bancshares go up and down completely randomly.

Pair Corralation between Byline Bancorp and Bridgewater Bancshares

Allowing for the 90-day total investment horizon Byline Bancorp is expected to generate 0.81 times more return on investment than Bridgewater Bancshares. However, Byline Bancorp is 1.24 times less risky than Bridgewater Bancshares. It trades about 0.0 of its potential returns per unit of risk. Bridgewater Bancshares is currently generating about -0.02 per unit of risk. If you would invest  2,358  in Byline Bancorp on December 30, 2023 and sell it today you would lose (186.00) from holding Byline Bancorp or give up 7.89% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthStrong
Accuracy100.0%
ValuesDaily Returns

Byline Bancorp  vs.  Bridgewater Bancshares

 Performance 
       Timeline  
Byline Bancorp 

Risk-Adjusted Performance

0 of 100

 
Low
 
High
Very Weak
Over the last 90 days Byline Bancorp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.
Bridgewater Bancshares 

Risk-Adjusted Performance

0 of 100

 
Low
 
High
Very Weak
Over the last 90 days Bridgewater Bancshares has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest conflicting performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Byline Bancorp and Bridgewater Bancshares Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Byline Bancorp and Bridgewater Bancshares

The main advantage of trading using opposite Byline Bancorp and Bridgewater Bancshares positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Byline Bancorp position performs unexpectedly, Bridgewater Bancshares 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 Bridgewater Bancshares will offset losses from the drop in Bridgewater Bancshares' long position.
The idea behind Byline Bancorp and Bridgewater Bancshares pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.

Other Complementary Tools

Earnings Calls
Check upcoming earnings announcements updated hourly across public exchanges
Bollinger Bands
Use Bollinger Bands indicator to analyze target price for a given investing horizon
Competition Analyzer
Analyze and compare many basic indicators for a group of related or unrelated entities
Money Managers
Screen money managers from public funds and ETFs managed around the world
Companies Directory
Evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals
Portfolio Diagnostics
Use generated alerts and portfolio events aggregator to diagnose current holdings
Watchlist Optimization
Optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm
Stock Tickers
Use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites
Insider Screener
Find insiders across different sectors to evaluate their impact on performance