Correlation Between Byline Bancorp and Pacific Premier

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

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

Diversification Opportunities for Byline Bancorp and Pacific Premier

0.95

Correlation Coefficient

Byline Bancorp  Pacific Premier

Almost no diversification

The 3 months correlation between Byline and Pacific is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding Byline Bancorp and Pacific Premier Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pacific Premier 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 Pacific Premier. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pacific Premier Bancorp has no effect on the direction of Byline Bancorp i.e., Byline Bancorp and Pacific Premier go up and down completely randomly.

Pair Corralation between Byline Bancorp and Pacific Premier

Allowing for the 90-day total investment horizon Byline Bancorp is expected to generate 0.8 times more return on investment than Pacific Premier. However, Byline Bancorp is 1.25 times less risky than Pacific Premier. It trades about -0.11 of its potential returns per unit of risk. Pacific Premier Bancorp is currently generating about -0.12 per unit of risk. If you would invest  2,886  in Byline Bancorp on December 28, 2024 and sell it today you would lose (269.00) from holding Byline Bancorp or give up 9.32% of portfolio value over 90 days.

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

Byline Bancorp  vs.  Pacific Premier 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.

Pacific Premier Bancorp

Risk-Adjusted Performance

Very Weak

Over the last 90 days Pacific Premier Bancorp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unsteady performance in the last few months, the Stock's fundamental drivers remain fairly strong which may send shares a bit higher in April 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Pair Trading with Byline Bancorp and Pacific Premier

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

The idea behind Byline Bancorp and Pacific Premier 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.