Correlation Between OceanFirst Financial and Byline Bancorp

Can any of the company-specific risk be diversified away by investing in both OceanFirst 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 OceanFirst 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 OceanFirst Financial Corp and Byline Bancorp, you can compare the effects of market volatilities on OceanFirst 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 OceanFirst Financial with a short position of Byline Bancorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of OceanFirst Financial and Byline Bancorp.

Diversification Opportunities for OceanFirst Financial and Byline Bancorp

0.96

Correlation Coefficient

OceanFirst Financial  Byline Bancorp

Almost no diversification

The 3 months correlation between OceanFirst and Byline is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding OceanFirst Financial Corp and Byline Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Byline Bancorp and OceanFirst 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 OceanFirst Financial Corp 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 OceanFirst Financial i.e., OceanFirst Financial and Byline Bancorp go up and down completely randomly.

Pair Corralation between OceanFirst Financial and Byline Bancorp

Given the investment horizon of 90 days OceanFirst Financial is expected to generate 1.28 times less return on investment than Byline Bancorp. In addition to that, OceanFirst Financial is 1.13 times more volatile than Byline Bancorp. It trades about 0.09 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  2,646  in Byline Bancorp on September 13, 2024 and sell it today you would earn a total of  530.00  from holding Byline Bancorp or generate 20.03% return on investment over 90 days.

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

OceanFirst Financial Corp  vs.  Byline Bancorp

OceanFirst Financial Corp

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in OceanFirst Financial Corp are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of rather inconsistent technical and fundamental indicators, OceanFirst Financial exhibited solid returns over the last few months and may actually be approaching a breakup point.

Byline Bancorp

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Byline Bancorp are ranked lower than 9 (%) 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 OceanFirst Financial and Byline Bancorp

The main advantage of trading using opposite OceanFirst Financial and Byline Bancorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if OceanFirst 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 OceanFirst Financial Corp 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.