Correlation Between Byline Bancorp and Bank7 Corp

Can any of the company-specific risk be diversified away by investing in both Byline Bancorp and Bank7 Corp 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 Bank7 Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Byline Bancorp and Bank7 Corp, you can compare the effects of market volatilities on Byline Bancorp and Bank7 Corp 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 Bank7 Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Byline Bancorp and Bank7 Corp.

Diversification Opportunities for Byline Bancorp and Bank7 Corp

0.74

Correlation Coefficient

Byline Bancorp  Bank7 Corp

Poor diversification

The 3 months correlation between Byline and Bank7 is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Byline Bancorp and Bank7 Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bank7 Corp 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 Bank7 Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bank7 Corp has no effect on the direction of Byline Bancorp i.e., Byline Bancorp and Bank7 Corp go up and down completely randomly.

Pair Corralation between Byline Bancorp and Bank7 Corp

Allowing for the 90-day total investment horizon Byline Bancorp is expected to generate 78.62 times less return on investment than Bank7 Corp. But when comparing it to its historical volatility, Byline Bancorp is 1.24 times less risky than Bank7 Corp. It trades about 0.0 of its potential returns per unit of risk. Bank7 Corp is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest  3,669  in Bank7 Corp on May 6, 2025 and sell it today you would earn a total of  680.00  from holding Bank7 Corp or generate 18.53% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Byline Bancorp  vs.  Bank7 Corp

Byline Bancorp

Risk-Adjusted Performance

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 fairly strong basic indicators, Byline Bancorp is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Bank7 Corp

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Bank7 Corp are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of very weak basic indicators, Bank7 Corp displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Byline Bancorp and Bank7 Corp

The main advantage of trading using opposite Byline Bancorp and Bank7 Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Byline Bancorp position performs unexpectedly, Bank7 Corp 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 Bank7 Corp will offset losses from the drop in Bank7 Corp's long position.

The idea behind Byline Bancorp and Bank7 Corp 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.