Correlation Between Byline Bancorp and Fifth Third

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

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

Diversification Opportunities for Byline Bancorp and Fifth Third

0.87

Correlation Coefficient

Byline Bancorp  Fifth Third

Very poor diversification

The 3 months correlation between Byline and Fifth is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Byline Bancorp and Fifth Third Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fifth Third 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 Fifth Third. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fifth Third Bancorp has no effect on the direction of Byline Bancorp i.e., Byline Bancorp and Fifth Third go up and down completely randomly.

Pair Corralation between Byline Bancorp and Fifth Third

Allowing for the 90-day total investment horizon Byline Bancorp is expected to generate 1.05 times more return on investment than Fifth Third. However, Byline Bancorp is 1.05 times more volatile than Fifth Third Bancorp. It trades about -0.11 of its potential returns per unit of risk. Fifth Third Bancorp is currently generating about -0.12 per unit of risk. If you would invest  3,141  in Byline Bancorp on November 27, 2024 and sell it today you would lose (289.00) from holding Byline Bancorp or give up 9.2% of portfolio value over 90 days.

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

Byline Bancorp  vs.  Fifth Third 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.

Fifth Third Bancorp

Risk-Adjusted Performance

Very Weak

Over the last 90 days Fifth Third Bancorp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak 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.

Pair Trading with Byline Bancorp and Fifth Third

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

The idea behind Byline Bancorp and Fifth Third 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 Commodity Directory module to find actively traded commodities issued by global exchanges.