Correlation Between First Foundation and Byline Bancorp
Can any of the company-specific risk be diversified away by investing in both First Foundation 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 First Foundation and Byline Bancorp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between First Foundation and Byline Bancorp, you can compare the effects of market volatilities on First Foundation 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 First Foundation with a short position of Byline Bancorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Foundation and Byline Bancorp.
Diversification Opportunities for First Foundation and Byline Bancorp
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between First and Byline is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding First Foundation and Byline Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Byline Bancorp and First Foundation 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 First Foundation 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 First Foundation i.e., First Foundation and Byline Bancorp go up and down completely randomly.
Pair Corralation between First Foundation and Byline Bancorp
Given the investment horizon of 90 days First Foundation is expected to under-perform the Byline Bancorp. In addition to that, First Foundation is 2.38 times more volatile than Byline Bancorp. It trades about -0.04 of its total potential returns per unit of risk. Byline Bancorp is currently generating about 0.09 per unit of volatility. If you would invest 2,094 in Byline Bancorp on December 29, 2023 and sell it today you would earn a total of 67.00 from holding Byline Bancorp or generate 3.2% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
First Foundation vs. Byline Bancorp
Performance |
Timeline |
First Foundation |
Byline Bancorp |
First Foundation and Byline Bancorp Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with First Foundation and Byline Bancorp
The main advantage of trading using opposite First Foundation and Byline Bancorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Foundation 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.First Foundation vs. Merchants Bancorp | First Foundation vs. Axos Financial | First Foundation vs. Regions Financial | First Foundation vs. Regions Financial |
Byline Bancorp vs. Merchants Bancorp | Byline Bancorp vs. Axos Financial | Byline Bancorp vs. Regions Financial | Byline Bancorp vs. Regions Financial |
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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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