Correlation Between Coastal Financial and Byline Bancorp
Can any of the company-specific risk be diversified away by investing in both Coastal Financial 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 Coastal Financial and Byline Bancorp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Coastal Financial Corp and Byline Bancorp, you can compare the effects of market volatilities on Coastal Financial 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 Coastal Financial with a short position of Byline Bancorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Coastal Financial and Byline Bancorp.
Diversification Opportunities for Coastal Financial and Byline Bancorp
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Coastal and Byline is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Coastal Financial Corp and Byline Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Byline Bancorp and Coastal Financial 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 Coastal Financial Corp 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 Coastal Financial i.e., Coastal Financial and Byline Bancorp go up and down completely randomly.
Pair Corralation between Coastal Financial and Byline Bancorp
Considering the 90-day investment horizon Coastal Financial Corp is expected to generate 0.92 times more return on investment than Byline Bancorp. However, Coastal Financial Corp is 1.09 times less risky than Byline Bancorp. It trades about -0.04 of its potential returns per unit of risk. Byline Bancorp is currently generating about -0.08 per unit of risk. If you would invest 3,856 in Coastal Financial Corp on January 20, 2024 and sell it today you would lose (73.00) from holding Coastal Financial Corp or give up 1.89% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 95.45% |
| Values | Daily Returns |
Coastal Financial Corp vs. Byline Bancorp
Performance |
| Timeline |
| Coastal Financial Corp |
| Byline Bancorp |
Coastal Financial and Byline Bancorp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Coastal Financial and Byline Bancorp
The main advantage of trading using opposite Coastal Financial and Byline Bancorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Coastal Financial 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.| Coastal Financial vs. Home Bancorp | Coastal Financial vs. Heritage Financial | Coastal Financial vs. Lake Shore Bancorp |
| Byline Bancorp vs. Home Bancorp | Byline Bancorp vs. Heritage Financial | Byline Bancorp vs. Lake Shore Bancorp |
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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