Correlation Between Capitol Federal and ConnectOne Bancorp
Can any of the company-specific risk be diversified away by investing in both Capitol Federal and ConnectOne 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 Capitol Federal and ConnectOne Bancorp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Capitol Federal Financial and ConnectOne Bancorp, you can compare the effects of market volatilities on Capitol Federal and ConnectOne 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 Capitol Federal with a short position of ConnectOne Bancorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Capitol Federal and ConnectOne Bancorp.
Diversification Opportunities for Capitol Federal and ConnectOne Bancorp
0.93 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Capitol and ConnectOne is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Capitol Federal Financial and ConnectOne Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ConnectOne Bancorp and Capitol Federal 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 Capitol Federal Financial are associated (or correlated) with ConnectOne Bancorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ConnectOne Bancorp has no effect on the direction of Capitol Federal i.e., Capitol Federal and ConnectOne Bancorp go up and down completely randomly.
Pair Corralation between Capitol Federal and ConnectOne Bancorp
Given the investment horizon of 90 days Capitol Federal Financial is expected to under-perform the ConnectOne Bancorp. But the stock apears to be less risky and, when comparing its historical volatility, Capitol Federal Financial is 1.11 times less risky than ConnectOne Bancorp. The stock trades about -0.01 of its potential returns per unit of risk. The ConnectOne Bancorp is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 2,248 in ConnectOne Bancorp on November 2, 2024 and sell it today you would earn a total of 288.00 from holding ConnectOne Bancorp or generate 12.81% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Capitol Federal Financial vs. ConnectOne Bancorp
Performance |
| Timeline |
| Capitol Federal Financial |
| ConnectOne Bancorp |
Capitol Federal and ConnectOne Bancorp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Capitol Federal and ConnectOne Bancorp
The main advantage of trading using opposite Capitol Federal and ConnectOne Bancorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Capitol Federal position performs unexpectedly, ConnectOne 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 ConnectOne Bancorp will offset losses from the drop in ConnectOne Bancorp's long position.| Capitol Federal vs. Independent Bank | Capitol Federal vs. BankFinancial | Capitol Federal vs. Business First Bancshares | Capitol Federal vs. First Bancorp |
| ConnectOne Bancorp vs. Rhinebeck Bancorp | ConnectOne Bancorp vs. Home Bancorp | ConnectOne Bancorp vs. Parke Bancorp | ConnectOne Bancorp vs. Great Southern Bancorp |
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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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