Correlation Between Byline Bancorp and Wells Fargo
Can any of the company-specific risk be diversified away by investing in both Byline Bancorp and Wells Fargo 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 Wells Fargo into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Byline Bancorp and Wells Fargo, you can compare the effects of market volatilities on Byline Bancorp and Wells Fargo 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 Wells Fargo. Check out your portfolio center. Please also check ongoing floating volatility patterns of Byline Bancorp and Wells Fargo.
Diversification Opportunities for Byline Bancorp and Wells Fargo
-0.45 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Byline and Wells is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding Byline Bancorp and Wells Fargo in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wells Fargo 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 Wells Fargo. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wells Fargo has no effect on the direction of Byline Bancorp i.e., Byline Bancorp and Wells Fargo go up and down completely randomly.
Pair Corralation between Byline Bancorp and Wells Fargo
Allowing for the 90-day total investment horizon Byline Bancorp is expected to under-perform the Wells Fargo. In addition to that, Byline Bancorp is 1.24 times more volatile than Wells Fargo. It trades about -0.03 of its total potential returns per unit of risk. Wells Fargo is currently generating about 0.23 per unit of volatility. If you would invest 4,997 in Wells Fargo on January 26, 2024 and sell it today you would earn a total of 1,063 from holding Wells Fargo or generate 21.27% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Byline Bancorp vs. Wells Fargo
Performance |
| Timeline |
| Byline Bancorp |
| Wells Fargo |
Byline Bancorp and Wells Fargo Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Byline Bancorp and Wells Fargo
The main advantage of trading using opposite Byline Bancorp and Wells Fargo positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Byline Bancorp position performs unexpectedly, Wells Fargo 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 Wells Fargo will offset losses from the drop in Wells Fargo's long position.| Byline Bancorp vs. Home Bancorp | Byline Bancorp vs. First Community | Byline Bancorp vs. Affinity Bancshares |
| Wells Fargo vs. Aquagold International | Wells Fargo vs. Thrivent High Yield | Wells Fargo vs. Morningstar Unconstrained Allocation | Wells Fargo vs. Via Renewables |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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