Correlation Between Byline Bancorp and Putnam Municipal

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

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

Diversification Opportunities for Byline Bancorp and Putnam Municipal

0.22

Correlation Coefficient

Byline Bancorp  Putnam Municipal

Modest diversification

The 3 months correlation between Byline and Putnam is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Byline Bancorp and Putnam Municipal Opportunities in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Putnam Municipal Opp 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 Putnam Municipal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Putnam Municipal Opp has no effect on the direction of Byline Bancorp i.e., Byline Bancorp and Putnam Municipal go up and down completely randomly.

Pair Corralation between Byline Bancorp and Putnam Municipal

Allowing for the 90-day total investment horizon Byline Bancorp is expected to under-perform the Putnam Municipal. In addition to that, Byline Bancorp is 1.95 times more volatile than Putnam Municipal Opportunities. It trades about -0.08 of its total potential returns per unit of risk. Putnam Municipal Opportunities is currently generating about 0.07 per unit of volatility. If you would invest  997.00  in Putnam Municipal Opportunities on December 27, 2024 and sell it today you would earn a total of  30.00  from holding Putnam Municipal Opportunities or generate 3.01% return on investment over 90 days.

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

Byline Bancorp  vs.  Putnam Municipal Opportunities

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.

Putnam Municipal Opp

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Putnam Municipal Opportunities are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy primary indicators, Putnam Municipal is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Byline Bancorp and Putnam Municipal

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

The idea behind Byline Bancorp and Putnam Municipal Opportunities 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.