Correlation Between Byline Bancorp and Eagle Bancorp
Can any of the company-specific risk be diversified away by investing in both Byline Bancorp and Eagle 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 Byline Bancorp and Eagle Bancorp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Byline Bancorp and Eagle Bancorp Montana, you can compare the effects of market volatilities on Byline Bancorp and Eagle 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 Byline Bancorp with a short position of Eagle Bancorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Byline Bancorp and Eagle Bancorp.
Diversification Opportunities for Byline Bancorp and Eagle Bancorp
0.9 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Byline and Eagle is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Byline Bancorp and Eagle Bancorp Montana in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eagle Bancorp Montana 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 Eagle Bancorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eagle Bancorp Montana has no effect on the direction of Byline Bancorp i.e., Byline Bancorp and Eagle Bancorp go up and down completely randomly.
Pair Corralation between Byline Bancorp and Eagle Bancorp
Allowing for the 90-day total investment horizon Byline Bancorp is expected to generate 2.59 times more return on investment than Eagle Bancorp. However, Byline Bancorp is 2.59 times more volatile than Eagle Bancorp Montana. It trades about -0.02 of its potential returns per unit of risk. Eagle Bancorp Montana is currently generating about -0.18 per unit of risk. If you would invest 2,102 in Byline Bancorp on January 21, 2024 and sell it today you would lose (30.00) from holding Byline Bancorp or give up 1.43% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Byline Bancorp vs. Eagle Bancorp Montana
Performance |
| Timeline |
| Byline Bancorp |
| Eagle Bancorp Montana |
Byline Bancorp and Eagle Bancorp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Byline Bancorp and Eagle Bancorp
The main advantage of trading using opposite Byline Bancorp and Eagle Bancorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Byline Bancorp position performs unexpectedly, Eagle 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 Eagle Bancorp will offset losses from the drop in Eagle Bancorp's long position.The idea behind Byline Bancorp and Eagle Bancorp Montana 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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