Correlation Between Byline Bancorp and Auburn National

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

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

Diversification Opportunities for Byline Bancorp and Auburn National

0.5

Correlation Coefficient

Byline Bancorp  Auburn National

Very weak diversification

The 3 months correlation between Byline and Auburn is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Byline Bancorp and Auburn National Bancorp. in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Auburn National Banc 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 Auburn National. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Auburn National Banc has no effect on the direction of Byline Bancorp i.e., Byline Bancorp and Auburn National go up and down completely randomly.

Pair Corralation between Byline Bancorp and Auburn National

Allowing for the 90-day total investment horizon Byline Bancorp is expected to generate 0.93 times more return on investment than Auburn National. However, Byline Bancorp is 1.07 times less risky than Auburn National. It trades about 0.02 of its potential returns per unit of risk. Auburn National Bancorporation is currently generating about 0.02 per unit of risk. If you would invest  2,499  in Byline Bancorp on October 25, 2024 and sell it today you would earn a total of  328.00  from holding Byline Bancorp or generate 13.13% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.38%
Values	Daily Returns

Byline Bancorp  vs.  Auburn National Bancorp.

Byline Bancorp

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Byline Bancorp are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly inconsistent basic indicators, Byline Bancorp may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Auburn National Banc

Risk-Adjusted Performance

6 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Auburn National Bancorporation are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of very conflicting fundamental drivers, Auburn National may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Byline Bancorp and Auburn National

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

The idea behind Byline Bancorp and Auburn National Bancorporation 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.