Correlation Between Prosperity Bancshares and Byline Bancorp
Can any of the company-specific risk be diversified away by investing in both Prosperity Bancshares 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 Prosperity Bancshares and Byline Bancorp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Prosperity Bancshares and Byline Bancorp, you can compare the effects of market volatilities on Prosperity Bancshares 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 Prosperity Bancshares with a short position of Byline Bancorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Prosperity Bancshares and Byline Bancorp.
Diversification Opportunities for Prosperity Bancshares and Byline Bancorp
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Prosperity and Byline is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Prosperity Bancshares and Byline Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Byline Bancorp and Prosperity Bancshares 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 Prosperity Bancshares 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 Prosperity Bancshares i.e., Prosperity Bancshares and Byline Bancorp go up and down completely randomly.
Pair Corralation between Prosperity Bancshares and Byline Bancorp
Allowing for the 90-day total investment horizon Prosperity Bancshares is expected to generate 1.28 times less return on investment than Byline Bancorp. But when comparing it to its historical volatility, Prosperity Bancshares is 1.09 times less risky than Byline Bancorp. It trades about 0.1 of its potential returns per unit of risk. Byline Bancorp is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 2,046 in Byline Bancorp on January 26, 2024 and sell it today you would earn a total of 97.00 from holding Byline Bancorp or generate 4.74% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Prosperity Bancshares vs. Byline Bancorp
Performance |
| Timeline |
| Prosperity Bancshares |
| Byline Bancorp |
Prosperity Bancshares and Byline Bancorp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Prosperity Bancshares and Byline Bancorp
The main advantage of trading using opposite Prosperity Bancshares and Byline Bancorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Prosperity Bancshares 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.| Prosperity Bancshares vs. Heartland Financial USA | Prosperity Bancshares vs. Heritage Commerce Corp | Prosperity Bancshares vs. Business First Bancshares | Prosperity Bancshares vs. German American Bancorp |
| Byline Bancorp vs. Affinity Bancshares | Byline Bancorp vs. HMN Financial | Byline Bancorp vs. Home Federal Bancorp | Byline Bancorp vs. LINKBANCORP |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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