Correlation Between Byline Bancorp and Enterprise Financial

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

Diversification Opportunities for Byline Bancorp and Enterprise Financial

-0.33

Correlation Coefficient

Byline Bancorp  Enterprise Financial

Very good diversification

The 3 months correlation between Byline and Enterprise is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding Byline Bancorp and Enterprise Financial Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Enterprise 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 Enterprise Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Enterprise Financial has no effect on the direction of Byline Bancorp i.e., Byline Bancorp and Enterprise Financial go up and down completely randomly.

Pair Corralation between Byline Bancorp and Enterprise Financial

Allowing for the 90-day total investment horizon Byline Bancorp is expected to generate 1.14 times more return on investment than Enterprise Financial. However, Byline Bancorp is 1.14 times more volatile than Enterprise Financial Services. It trades about 0.04 of its potential returns per unit of risk. Enterprise Financial Services is currently generating about 0.04 per unit of risk. If you would invest  2,204  in Byline Bancorp on September 14, 2024 and sell it today you would earn a total of  924.00  from holding Byline Bancorp or generate 41.92% return on investment over 90 days.

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

Byline Bancorp  vs.  Enterprise Financial Services

Byline Bancorp

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Byline Bancorp are ranked lower than 8 (%) 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.

Enterprise Financial

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Enterprise Financial Services are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable fundamental indicators, Enterprise Financial is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Byline Bancorp and Enterprise Financial

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

The idea behind Byline Bancorp and Enterprise Financial Services 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.