Correlation Between Magyar Bancorp and Byline Bancorp

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

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

Diversification Opportunities for Magyar Bancorp and Byline Bancorp

0.59

Correlation Coefficient

Magyar Bancorp  Byline Bancorp

Very weak diversification

The 3 months correlation between Magyar and Byline is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Magyar Bancorp and Byline Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Byline Bancorp and Magyar 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 Magyar Bancorp 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 Magyar Bancorp i.e., Magyar Bancorp and Byline Bancorp go up and down completely randomly.

Pair Corralation between Magyar Bancorp and Byline Bancorp

Given the investment horizon of 90 days Magyar Bancorp is expected to generate 1.09 times more return on investment than Byline Bancorp. However, Magyar Bancorp is 1.09 times more volatile than Byline Bancorp. It trades about -0.04 of its potential returns per unit of risk. Byline Bancorp is currently generating about -0.29 per unit of risk. If you would invest  1,446  in Magyar Bancorp on October 6, 2024 and sell it today you would lose (21.00) from holding Magyar Bancorp or give up 1.45% of portfolio value over 90 days.

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

Magyar Bancorp  vs.  Byline Bancorp

Magyar Bancorp

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Magyar Bancorp are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Even with relatively unsteady basic indicators, Magyar Bancorp reported solid returns over the last few months and may actually be approaching a breakup point.

Byline Bancorp

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Byline Bancorp are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of fairly inconsistent basic indicators, Byline Bancorp showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Magyar Bancorp and Byline Bancorp

The main advantage of trading using opposite Magyar Bancorp and Byline Bancorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Magyar Bancorp 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 Magyar Bancorp 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.

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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.