Correlation Between Byline Bancorp and Credicorp

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

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

Diversification Opportunities for Byline Bancorp and Credicorp

0.46

Correlation Coefficient

Byline Bancorp  Credicorp

Very weak diversification

The 3 months correlation between Byline and Credicorp is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Byline Bancorp and Credicorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Credicorp 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 Credicorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Credicorp has no effect on the direction of Byline Bancorp i.e., Byline Bancorp and Credicorp go up and down completely randomly.

Pair Corralation between Byline Bancorp and Credicorp

Allowing for the 90-day total investment horizon Byline Bancorp is expected to under-perform the Credicorp. But the stock apears to be less risky and, when comparing its historical volatility, Byline Bancorp is 1.14 times less risky than Credicorp. The stock trades about -0.04 of its potential returns per unit of risk. The Credicorp is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  18,017  in Credicorp on October 20, 2024 and sell it today you would earn a total of  197.00  from holding Credicorp or generate 1.09% return on investment over 90 days.

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

Byline Bancorp  vs.  Credicorp

Byline Bancorp

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Byline Bancorp are ranked lower than 5 (%) 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.

Credicorp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Credicorp has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Credicorp is not utilizing all of its potentials. The recent stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Byline Bancorp and Credicorp

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

The idea behind Byline Bancorp and Credicorp 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..