Correlation Between Metropolitan Bank and Byline Bancorp
Can any of the company-specific risk be diversified away by investing in both Metropolitan Bank 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 Metropolitan Bank and Byline Bancorp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Metropolitan Bank Holding and Byline Bancorp, you can compare the effects of market volatilities on Metropolitan Bank 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 Metropolitan Bank with a short position of Byline Bancorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Metropolitan Bank and Byline Bancorp.
Diversification Opportunities for Metropolitan Bank and Byline Bancorp
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Metropolitan and Byline is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Metropolitan Bank Holding and Byline Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Byline Bancorp and Metropolitan Bank 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 Metropolitan Bank Holding 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 Metropolitan Bank i.e., Metropolitan Bank and Byline Bancorp go up and down completely randomly.
Pair Corralation between Metropolitan Bank and Byline Bancorp
Considering the 90-day investment horizon Metropolitan Bank Holding is expected to generate 2.46 times more return on investment than Byline Bancorp. However, Metropolitan Bank is 2.46 times more volatile than Byline Bancorp. It trades about 0.15 of its potential returns per unit of risk. Byline Bancorp is currently generating about 0.09 per unit of risk. If you would invest 3,671 in Metropolitan Bank Holding on January 25, 2024 and sell it today you would earn a total of 554.00 from holding Metropolitan Bank Holding or generate 15.09% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Strong |
Accuracy | 100.0% |
Values | Daily Returns |
Metropolitan Bank Holding vs. Byline Bancorp
Performance |
Timeline |
Metropolitan Bank Holding |
Byline Bancorp |
Metropolitan Bank and Byline Bancorp Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Metropolitan Bank and Byline Bancorp
The main advantage of trading using opposite Metropolitan Bank and Byline Bancorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Metropolitan Bank 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.Metropolitan Bank vs. Customers Bancorp | Metropolitan Bank vs. BayCom Corp | Metropolitan Bank vs. Capital Bancorp | Metropolitan Bank vs. Investar Holding Corp |
Byline Bancorp vs. Affinity Bancshares | Byline Bancorp vs. HMN Financial | Byline Bancorp vs. Home Federal Bancorp | Byline Bancorp vs. LINKBANCORP |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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