Correlation Between Byline Bancorp and 1st Source

Can any of the company-specific risk be diversified away by investing in both Byline Bancorp and 1st Source 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 1st Source into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Byline Bancorp and 1st Source, you can compare the effects of market volatilities on Byline Bancorp and 1st Source 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 1st Source. Check out your portfolio center. Please also check ongoing floating volatility patterns of Byline Bancorp and 1st Source.

Diversification Opportunities for Byline Bancorp and 1st Source

0.96

Correlation Coefficient

Byline Bancorp  1st Source

Almost no diversification

The 3 months correlation between Byline and 1st is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding Byline Bancorp and 1st Source in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on 1st Source 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 1st Source. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of 1st Source has no effect on the direction of Byline Bancorp i.e., Byline Bancorp and 1st Source go up and down completely randomly.

Pair Corralation between Byline Bancorp and 1st Source

Allowing for the 90-day total investment horizon Byline Bancorp is expected to generate 1.21 times more return on investment than 1st Source. However, Byline Bancorp is 1.21 times more volatile than 1st Source. It trades about 0.1 of its potential returns per unit of risk. 1st Source is currently generating about 0.06 per unit of risk. If you would invest  2,733  in Byline Bancorp on August 31, 2024 and sell it today you would earn a total of  419.00  from holding Byline Bancorp or generate 15.33% return on investment over 90 days.

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

Byline Bancorp  vs.  1st Source

Byline Bancorp

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Byline Bancorp are ranked lower than 7 (%) 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.

1st Source

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in 1st Source are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady fundamental indicators, 1st Source may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Pair Trading with Byline Bancorp and 1st Source

The main advantage of trading using opposite Byline Bancorp and 1st Source positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Byline Bancorp position performs unexpectedly, 1st Source 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 1st Source will offset losses from the drop in 1st Source's long position.

The idea behind Byline Bancorp and 1st Source 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.