Correlation Between Byline Bancorp and TrustCo Bank

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

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

Diversification Opportunities for Byline Bancorp and TrustCo Bank

0.76

Correlation Coefficient

Byline Bancorp  TrustCo Bank

Poor diversification

The 3 months correlation between Byline and TrustCo is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Byline Bancorp and TrustCo Bank Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TrustCo Bank Corp 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 TrustCo Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TrustCo Bank Corp has no effect on the direction of Byline Bancorp i.e., Byline Bancorp and TrustCo Bank go up and down completely randomly.

Pair Corralation between Byline Bancorp and TrustCo Bank

Allowing for the 90-day total investment horizon Byline Bancorp is expected to generate 1.03 times more return on investment than TrustCo Bank. However, Byline Bancorp is 1.03 times more volatile than TrustCo Bank Corp. It trades about 0.03 of its potential returns per unit of risk. TrustCo Bank Corp is currently generating about -0.02 per unit of risk. If you would invest  1,995  in Byline Bancorp on March 9, 2024 and sell it today you would earn a total of  263.00  from holding Byline Bancorp or generate 13.18% return on investment over 90 days.

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

Byline Bancorp  vs.  TrustCo Bank Corp

Byline Bancorp

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Byline Bancorp are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of fairly fragile basic indicators, Byline Bancorp may actually be approaching a critical reversion point that can send shares even higher in July 2024.

TrustCo Bank Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days TrustCo Bank Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, TrustCo Bank is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Byline Bancorp and TrustCo Bank

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

The idea behind Byline Bancorp and TrustCo Bank Corp 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.