Correlation Between Byline Bancorp and Carlyle

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

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

Diversification Opportunities for Byline Bancorp and Carlyle

-0.53

Correlation Coefficient

Byline Bancorp  Carlyle

Excellent diversification

The 3 months correlation between Byline and Carlyle is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding Byline Bancorp and Carlyle Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Carlyle Group 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 Carlyle. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Carlyle Group has no effect on the direction of Byline Bancorp i.e., Byline Bancorp and Carlyle go up and down completely randomly.

Pair Corralation between Byline Bancorp and Carlyle

Allowing for the 90-day total investment horizon Byline Bancorp is expected to generate 1.34 times more return on investment than Carlyle. However, Byline Bancorp is 1.34 times more volatile than Carlyle Group. It trades about 0.02 of its potential returns per unit of risk. Carlyle Group is currently generating about -0.05 per unit of risk. If you would invest  2,172  in Byline Bancorp on January 28, 2024 and sell it today you would earn a total of  6.00  from holding Byline Bancorp or generate 0.28% return on investment over 90 days.

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

Byline Bancorp  vs.  Carlyle Group

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.

Carlyle Group

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Carlyle Group are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain technical and fundamental indicators, Carlyle reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Byline Bancorp and Carlyle

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

The idea behind Byline Bancorp and Carlyle Group 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.