Correlation Between Byline Bancorp and Fidelity

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

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

Diversification Opportunities for Byline Bancorp and Fidelity

0.59

Correlation Coefficient

Byline Bancorp  Fidelity

Very weak diversification

The 3 months correlation between Byline and Fidelity is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Byline Bancorp and Fidelity DD Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity DD Bancorp 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 Fidelity. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fidelity DD Bancorp has no effect on the direction of Byline Bancorp i.e., Byline Bancorp and Fidelity go up and down completely randomly.

Pair Corralation between Byline Bancorp and Fidelity

Allowing for the 90-day total investment horizon Byline Bancorp is expected to generate 0.61 times more return on investment than Fidelity. However, Byline Bancorp is 1.65 times less risky than Fidelity. It trades about -0.11 of its potential returns per unit of risk. Fidelity DD Bancorp is currently generating about -0.08 per unit of risk. If you would invest  2,929  in Byline Bancorp on December 25, 2024 and sell it today you would lose (265.00) from holding Byline Bancorp or give up 9.05% of portfolio value over 90 days.

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

Byline Bancorp  vs.  Fidelity DD Bancorp

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.

Fidelity DD Bancorp

Risk-Adjusted Performance

Very Weak

Over the last 90 days Fidelity DD Bancorp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest fragile performance, the Stock's fundamental drivers remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Pair Trading with Byline Bancorp and Fidelity

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

The idea behind Byline Bancorp and Fidelity DD 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.

Check out your portfolio center.

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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.