Correlation Between ConnectOne Bancorp and Oak Valley
Can any of the company-specific risk be diversified away by investing in both ConnectOne Bancorp and Oak Valley 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 ConnectOne Bancorp and Oak Valley into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ConnectOne Bancorp and Oak Valley Bancorp, you can compare the effects of market volatilities on ConnectOne Bancorp and Oak Valley 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 ConnectOne Bancorp with a short position of Oak Valley. Check out your portfolio center. Please also check ongoing floating volatility patterns of ConnectOne Bancorp and Oak Valley.
Diversification Opportunities for ConnectOne Bancorp and Oak Valley
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between ConnectOne and Oak is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding ConnectOne Bancorp and Oak Valley Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Oak Valley Bancorp and ConnectOne 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 ConnectOne Bancorp are associated (or correlated) with Oak Valley. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Oak Valley Bancorp has no effect on the direction of ConnectOne Bancorp i.e., ConnectOne Bancorp and Oak Valley go up and down completely randomly.
Pair Corralation between ConnectOne Bancorp and Oak Valley
Assuming the 90 days horizon ConnectOne Bancorp is expected to generate 2.38 times less return on investment than Oak Valley. But when comparing it to its historical volatility, ConnectOne Bancorp is 2.25 times less risky than Oak Valley. It trades about 0.28 of its potential returns per unit of risk. Oak Valley Bancorp is currently generating about 0.3 of returns per unit of risk over similar time horizon. If you would invest 2,719 in Oak Valley Bancorp on August 27, 2024 and sell it today you would earn a total of 421.00 from holding Oak Valley Bancorp or generate 15.48% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
ConnectOne Bancorp vs. Oak Valley Bancorp
Performance |
| Timeline |
| ConnectOne Bancorp |
| Oak Valley Bancorp |
ConnectOne Bancorp and Oak Valley Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ConnectOne Bancorp and Oak Valley
The main advantage of trading using opposite ConnectOne Bancorp and Oak Valley positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ConnectOne Bancorp position performs unexpectedly, Oak Valley 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 Oak Valley will offset losses from the drop in Oak Valley's long position.| ConnectOne Bancorp vs. Dime Community Bancshares | ConnectOne Bancorp vs. Washington Federal | ConnectOne Bancorp vs. CNB Financial | ConnectOne Bancorp vs. First Guaranty Bancshares |
| Oak Valley vs. Fifth Third Bancorp | Oak Valley vs. Zions Bancorporation | Oak Valley vs. Huntington Bancshares Incorporated | Oak Valley vs. Comerica |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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