Correlation Between Bank of Ireland and Byline Bancorp

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

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

Diversification Opportunities for Bank of Ireland and Byline Bancorp

-0.63

Correlation Coefficient

Bank of Ireland  Byline Bancorp

Excellent diversification

The 3 months correlation between Bank and Byline is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding Bank of Ireland and Byline Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Byline Bancorp and Bank of Ireland 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 Bank of Ireland 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 Bank of Ireland i.e., Bank of Ireland and Byline Bancorp go up and down completely randomly.

Pair Corralation between Bank of Ireland and Byline Bancorp

Assuming the 90 days trading horizon Bank of Ireland is expected to under-perform the Byline Bancorp. But the stock apears to be less risky and, when comparing its historical volatility, Bank of Ireland is 1.03 times less risky than Byline Bancorp. The stock trades about -0.07 of its potential returns per unit of risk. The Byline Bancorp is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  2,671  in Byline Bancorp on September 5, 2024 and sell it today you would earn a total of  447.00  from holding Byline Bancorp or generate 16.74% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	98.46%
Values	Daily Returns

Bank of Ireland  vs.  Byline Bancorp

Bank of Ireland

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Bank of Ireland has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Byline Bancorp

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Byline Bancorp are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of fairly inconsistent basic indicators, Byline Bancorp showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Bank of Ireland and Byline Bancorp

The main advantage of trading using opposite Bank of Ireland and Byline Bancorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of Ireland 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 Bank of Ireland 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.