Correlation Between Byline Bancorp and Esquire Financial
Can any of the company-specific risk be diversified away by investing in both Byline Bancorp and Esquire Financial 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 Esquire Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Byline Bancorp and Esquire Financial Holdings, you can compare the effects of market volatilities on Byline Bancorp and Esquire Financial 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 Esquire Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Byline Bancorp and Esquire Financial.
Diversification Opportunities for Byline Bancorp and Esquire Financial
0.35 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Byline and Esquire is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Byline Bancorp and Esquire Financial Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Esquire Financial 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 Esquire Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Esquire Financial has no effect on the direction of Byline Bancorp i.e., Byline Bancorp and Esquire Financial go up and down completely randomly.
Pair Corralation between Byline Bancorp and Esquire Financial
Allowing for the 90-day total investment horizon Byline Bancorp is expected to under-perform the Esquire Financial. But the stock apears to be less risky and, when comparing its historical volatility, Byline Bancorp is 1.1 times less risky than Esquire Financial. The stock trades about 0.0 of its potential returns per unit of risk. The Esquire Financial Holdings is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 3,526 in Esquire Financial Holdings on January 17, 2024 and sell it today you would earn a total of 1,004 from holding Esquire Financial Holdings or generate 28.47% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Byline Bancorp vs. Esquire Financial Holdings
Performance |
| Timeline |
| Byline Bancorp |
| Esquire Financial |
Byline Bancorp and Esquire Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Byline Bancorp and Esquire Financial
The main advantage of trading using opposite Byline Bancorp and Esquire Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Byline Bancorp position performs unexpectedly, Esquire Financial 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 Esquire Financial will offset losses from the drop in Esquire Financial's long position.The idea behind Byline Bancorp and Esquire Financial Holdings 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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