Correlation Between Byline Bancorp and Wintrust Financial

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

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

Diversification Opportunities for Byline Bancorp and Wintrust Financial

0.75

Correlation Coefficient

Byline Bancorp  Wintrust Financial

Poor diversification

The 3 months correlation between Byline and Wintrust is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Byline Bancorp and Wintrust Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wintrust Financial 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 Wintrust Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wintrust Financial has no effect on the direction of Byline Bancorp i.e., Byline Bancorp and Wintrust Financial go up and down completely randomly.

Pair Corralation between Byline Bancorp and Wintrust Financial

Allowing for the 90-day total investment horizon Byline Bancorp is expected to generate 0.8 times more return on investment than Wintrust Financial. However, Byline Bancorp is 1.24 times less risky than Wintrust Financial. It trades about -0.08 of its potential returns per unit of risk. Wintrust Financial is currently generating about -0.07 per unit of risk. If you would invest  2,886  in Byline Bancorp on December 28, 2024 and sell it today you would lose (210.00) from holding Byline Bancorp or give up 7.28% of portfolio value over 90 days.

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

Byline Bancorp  vs.  Wintrust Financial

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.

Wintrust Financial

Risk-Adjusted Performance

Very Weak

Over the last 90 days Wintrust Financial has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's technical and fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Pair Trading with Byline Bancorp and Wintrust Financial

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

The idea behind Byline Bancorp and Wintrust Financial 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.