Correlation Between Lexinfintech Holdings and Byline Bancorp

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

By analyzing existing cross correlation between Lexinfintech Holdings and Byline Bancorp, you can compare the effects of market volatilities on Lexinfintech Holdings 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 Lexinfintech Holdings with a short position of Byline Bancorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lexinfintech Holdings and Byline Bancorp.

Diversification Opportunities for Lexinfintech Holdings and Byline Bancorp

0.33

Correlation Coefficient

Lexinfintech Holdings  Byline Bancorp

Weak diversification

The 3 months correlation between Lexinfintech and Byline is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Lexinfintech Holdings and Byline Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Byline Bancorp and Lexinfintech Holdings 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 Lexinfintech Holdings 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 Lexinfintech Holdings i.e., Lexinfintech Holdings and Byline Bancorp go up and down completely randomly.

Pair Corralation between Lexinfintech Holdings and Byline Bancorp

Allowing for the 90-day total investment horizon Lexinfintech Holdings is expected to under-perform the Byline Bancorp. But the stock apears to be less risky and, when comparing its historical volatility, Lexinfintech Holdings is 1.05 times less risky than Byline Bancorp. The stock trades about -0.07 of its potential returns per unit of risk. The 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	Very Weak
Accuracy	100.0%
Values	Daily Returns

Lexinfintech Holdings  vs.  Byline Bancorp

Lexinfintech Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Lexinfintech Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, Lexinfintech Holdings is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Byline Bancorp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Byline Bancorp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, Byline Bancorp is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Lexinfintech Holdings and Byline Bancorp

The main advantage of trading using opposite Lexinfintech Holdings and Byline Bancorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lexinfintech Holdings 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.

The idea behind Lexinfintech Holdings and Byline Bancorp 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.