Correlation Between Luther Burbank and Byline Bancorp

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

Diversification Opportunities for Luther Burbank and Byline Bancorp

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  Correlation Coefficient

Pay attention - limited upside

The 3 months correlation between Luther and Byline is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Luther Burbank and Byline Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Byline Bancorp and Luther Burbank 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 Luther Burbank 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 Luther Burbank i.e., Luther Burbank and Byline Bancorp go up and down completely randomly.

Pair Corralation between Luther Burbank and Byline Bancorp

Considering the 90-day investment horizon Luther Burbank is expected to generate 3.14 times less return on investment than Byline Bancorp. But when comparing it to its historical volatility, Luther Burbank is 4.77 times less risky than Byline Bancorp. It trades about 0.15 of its potential returns per unit of risk. Byline Bancorp is currently generating about 0.1 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  78.00  from holding Byline Bancorp or generate 3.72% return on investment over 90 days.
Time Period3 Months [change]
DirectionFlat 
StrengthInsignificant
Accuracy17.39%
ValuesDaily Returns

Luther Burbank  vs.  Byline Bancorp

 Performance 
       Timeline  
Luther Burbank 

Risk-Adjusted Performance

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Over the last 90 days Luther Burbank has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's fundamental drivers remain rather sound which may send shares a bit higher in April 2024. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.
Byline Bancorp 

Risk-Adjusted Performance

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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.

Luther Burbank and Byline Bancorp Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Luther Burbank and Byline Bancorp

The main advantage of trading using opposite Luther Burbank and Byline Bancorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Luther Burbank 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 Luther Burbank 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.

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