Correlation Between CVB Financial and Byline Bancorp

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

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

Diversification Opportunities for CVB Financial and Byline Bancorp

0.84

Correlation Coefficient

CVB Financial  Byline Bancorp

Very poor diversification

The 3 months correlation between CVB and Byline is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding CVB Financial and Byline Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Byline Bancorp and CVB Financial 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 CVB Financial are associated (or correlated) with Byline Bancorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Byline Bancorp has no effect on the direction of CVB Financial i.e., CVB Financial and Byline Bancorp go up and down completely randomly.

Pair Corralation between CVB Financial and Byline Bancorp

Given the investment horizon of 90 days CVB Financial is expected to under-perform the Byline Bancorp. In addition to that, CVB Financial is 1.23 times more volatile than Byline Bancorp. It trades about -0.13 of its total potential returns per unit of risk. Byline Bancorp is currently generating about -0.12 per unit of volatility. If you would invest  3,131  in Byline Bancorp on November 29, 2024 and sell it today you would lose (314.50) from holding Byline Bancorp or give up 10.04% of portfolio value over 90 days.

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

CVB Financial  vs.  Byline Bancorp

CVB Financial

Risk-Adjusted Performance

Very Weak

Over the last 90 days CVB Financial has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's fundamental drivers remain nearly stable which may send shares a bit higher in March 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

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.

Pair Trading with CVB Financial and Byline Bancorp

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

The idea behind CVB Financial and Byline 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.