Correlation Between Byline Bancorp and Texas Capital
Can any of the company-specific risk be diversified away by investing in both Byline Bancorp and Texas Capital 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 Texas Capital into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Byline Bancorp and Texas Capital Bancshares, you can compare the effects of market volatilities on Byline Bancorp and Texas Capital 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 Texas Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Byline Bancorp and Texas Capital.
Diversification Opportunities for Byline Bancorp and Texas Capital
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Byline and Texas is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Byline Bancorp and Texas Capital Bancshares in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Texas Capital Bancshares 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 Texas Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Texas Capital Bancshares has no effect on the direction of Byline Bancorp i.e., Byline Bancorp and Texas Capital go up and down completely randomly.
Pair Corralation between Byline Bancorp and Texas Capital
Allowing for the 90-day total investment horizon Byline Bancorp is expected to under-perform the Texas Capital. But the stock apears to be less risky and, when comparing its historical volatility, Byline Bancorp is 1.35 times less risky than Texas Capital. The stock trades about -0.08 of its potential returns per unit of risk. The Texas Capital Bancshares is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest 7,761 in Texas Capital Bancshares on December 27, 2024 and sell it today you would lose (230.00) from holding Texas Capital Bancshares or give up 2.96% 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. Texas Capital Bancshares
Performance |
Timeline |
Byline Bancorp |
Texas Capital Bancshares |
Byline Bancorp and Texas Capital Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Byline Bancorp and Texas Capital
The main advantage of trading using opposite Byline Bancorp and Texas Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Byline Bancorp position performs unexpectedly, Texas Capital 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 Texas Capital will offset losses from the drop in Texas Capital's long position.Byline Bancorp vs. Affinity Bancshares | Byline Bancorp vs. Home Federal Bancorp | Byline Bancorp vs. LINKBANCORP | Byline Bancorp vs. Bankwell Financial Group |
Texas Capital vs. Heritage Commerce Corp | Texas Capital vs. Business First Bancshares | Texas Capital vs. German American Bancorp | Texas Capital vs. Commerce Bancshares |
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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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