Correlation Between ConnectOne Bancorp and Provident Bancorp
Can any of the company-specific risk be diversified away by investing in both ConnectOne Bancorp and Provident 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 ConnectOne Bancorp and Provident Bancorp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ConnectOne Bancorp and Provident Bancorp, you can compare the effects of market volatilities on ConnectOne Bancorp and Provident 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 ConnectOne Bancorp with a short position of Provident Bancorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of ConnectOne Bancorp and Provident Bancorp.
Diversification Opportunities for ConnectOne Bancorp and Provident Bancorp
0.51 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between ConnectOne and Provident is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding ConnectOne Bancorp and Provident Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Provident 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 Provident Bancorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Provident Bancorp has no effect on the direction of ConnectOne Bancorp i.e., ConnectOne Bancorp and Provident Bancorp go up and down completely randomly.
Pair Corralation between ConnectOne Bancorp and Provident Bancorp
Assuming the 90 days horizon ConnectOne Bancorp is expected to generate 1.38 times less return on investment than Provident Bancorp. But when comparing it to its historical volatility, ConnectOne Bancorp is 3.19 times less risky than Provident Bancorp. It trades about 0.1 of its potential returns per unit of risk. Provident Bancorp is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 1,188 in Provident Bancorp on December 1, 2024 and sell it today you would earn a total of 15.00 from holding Provident Bancorp or generate 1.26% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
ConnectOne Bancorp vs. Provident Bancorp
Performance |
| Timeline |
| ConnectOne Bancorp |
| Provident Bancorp |
ConnectOne Bancorp and Provident Bancorp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ConnectOne Bancorp and Provident Bancorp
The main advantage of trading using opposite ConnectOne Bancorp and Provident Bancorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ConnectOne Bancorp position performs unexpectedly, Provident 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 Provident Bancorp will offset losses from the drop in Provident Bancorp'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 |
| Provident Bancorp vs. Home Federal Bancorp | Provident Bancorp vs. Community West Bancshares | Provident Bancorp vs. First Financial Northwest | Provident Bancorp vs. First Northwest 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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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