Correlation Between Byline Bancorp and BlackRock Municipal

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

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

Diversification Opportunities for Byline Bancorp and BlackRock Municipal

-0.51

Correlation Coefficient

Byline Bancorp  BlackRock Municipal

Excellent diversification

The 3 months correlation between Byline and BlackRock is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding Byline Bancorp and BlackRock Municipal Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BlackRock Municipal 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 BlackRock Municipal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BlackRock Municipal has no effect on the direction of Byline Bancorp i.e., Byline Bancorp and BlackRock Municipal go up and down completely randomly.

Pair Corralation between Byline Bancorp and BlackRock Municipal

Allowing for the 90-day total investment horizon Byline Bancorp is expected to generate 4.65 times more return on investment than BlackRock Municipal. However, Byline Bancorp is 4.65 times more volatile than BlackRock Municipal Income. It trades about 0.13 of its potential returns per unit of risk. BlackRock Municipal Income is currently generating about -0.02 per unit of risk. If you would invest  2,583  in Byline Bancorp on September 12, 2024 and sell it today you would earn a total of  540.00  from holding Byline Bancorp or generate 20.91% return on investment over 90 days.

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

Byline Bancorp  vs.  BlackRock Municipal Income

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.

BlackRock Municipal

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days BlackRock Municipal Income has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent technical and fundamental indicators, BlackRock Municipal is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Byline Bancorp and BlackRock Municipal

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

The idea behind Byline Bancorp and BlackRock Municipal Income 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.