Correlation Between Byline Bancorp and Orix Corp

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

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

Diversification Opportunities for Byline Bancorp and Orix Corp

0.74

Correlation Coefficient

Byline Bancorp  Orix Corp

Poor diversification

The 3 months correlation between Byline and Orix is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Byline Bancorp and Orix Corp Ads in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Orix Corp Ads 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 Orix Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Orix Corp Ads has no effect on the direction of Byline Bancorp i.e., Byline Bancorp and Orix Corp go up and down completely randomly.

Pair Corralation between Byline Bancorp and Orix Corp

Allowing for the 90-day total investment horizon Byline Bancorp is expected to generate 1.38 times more return on investment than Orix Corp. However, Byline Bancorp is 1.38 times more volatile than Orix Corp Ads. It trades about 0.03 of its potential returns per unit of risk. Orix Corp Ads is currently generating about 0.03 per unit of risk. If you would invest  2,387  in Byline Bancorp on November 19, 2024 and sell it today you would earn a total of  563.00  from holding Byline Bancorp or generate 23.59% return on investment over 90 days.

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

Byline Bancorp  vs.  Orix Corp Ads

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 fairly strong basic indicators, Byline Bancorp is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Orix Corp Ads

Risk-Adjusted Performance

Very Weak

Over the last 90 days Orix Corp Ads has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, Orix Corp is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Byline Bancorp and Orix Corp

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

The idea behind Byline Bancorp and Orix Corp Ads 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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.