Correlation Between FVCBankcorp and Byline Bancorp

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

Diversification Opportunities for FVCBankcorp and Byline Bancorp

0.94
  Correlation Coefficient

Almost no diversification

The 3 months correlation between FVCBankcorp and Byline is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding FVCBankcorp and Byline Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Byline Bancorp and FVCBankcorp 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 FVCBankcorp 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 FVCBankcorp i.e., FVCBankcorp and Byline Bancorp go up and down completely randomly.

Pair Corralation between FVCBankcorp and Byline Bancorp

Given the investment horizon of 90 days FVCBankcorp is expected to generate 1.0 times less return on investment than Byline Bancorp. But when comparing it to its historical volatility, FVCBankcorp is 1.23 times less risky than Byline Bancorp. It trades about 0.11 of its potential returns per unit of risk. Byline Bancorp is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  2,094  in Byline Bancorp on December 29, 2023 and sell it today you would earn a total of  67.00  from holding Byline Bancorp or generate 3.2% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Strong
Accuracy100.0%
ValuesDaily Returns

FVCBankcorp  vs.  Byline Bancorp

 Performance 
       Timeline  
FVCBankcorp 

Risk-Adjusted Performance

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High
Very Weak
Over the last 90 days FVCBankcorp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unfluctuating performance in the last few months, the Stock's fundamental indicators remain somewhat strong which may send shares a bit higher in April 2024. The current disturbance may also be a sign of long term up-swing for the company investors.
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 unfluctuating 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.

FVCBankcorp and Byline Bancorp Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with FVCBankcorp and Byline Bancorp

The main advantage of trading using opposite FVCBankcorp and Byline Bancorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FVCBankcorp 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.
The idea behind FVCBankcorp and Byline Bancorp 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.
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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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.

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