Correlation Between Byline Bancorp and Abacus Life

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

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

Diversification Opportunities for Byline Bancorp and Abacus Life

-0.69

Correlation Coefficient

Byline Bancorp  Abacus Life

Excellent diversification

The 3 months correlation between Byline and Abacus is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding Byline Bancorp and Abacus Life in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Abacus Life 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 Abacus Life. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Abacus Life has no effect on the direction of Byline Bancorp i.e., Byline Bancorp and Abacus Life go up and down completely randomly.

Pair Corralation between Byline Bancorp and Abacus Life

Allowing for the 90-day total investment horizon Byline Bancorp is expected to under-perform the Abacus Life. But the stock apears to be less risky and, when comparing its historical volatility, Byline Bancorp is 4.41 times less risky than Abacus Life. The stock trades about -0.11 of its potential returns per unit of risk. The Abacus Life is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest  106.00  in Abacus Life on December 28, 2024 and sell it today you would earn a total of  53.00  from holding Abacus Life or generate 50.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	98.36%
Values	Daily Returns

Byline Bancorp  vs.  Abacus Life

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 latest inconsistent 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.

Abacus Life

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Abacus Life are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of fairly conflicting essential indicators, Abacus Life showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Byline Bancorp and Abacus Life

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

The idea behind Byline Bancorp and Abacus Life 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..