Correlation Between Commerzbank and ConnectOne Bancorp
Can any of the company-specific risk be diversified away by investing in both Commerzbank 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 Commerzbank and ConnectOne Bancorp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Commerzbank AG PK and ConnectOne Bancorp, you can compare the effects of market volatilities on Commerzbank 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 Commerzbank with a short position of ConnectOne Bancorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Commerzbank and ConnectOne Bancorp.
Diversification Opportunities for Commerzbank and ConnectOne Bancorp
0.55 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Commerzbank and ConnectOne is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Commerzbank AG PK and ConnectOne Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ConnectOne Bancorp and Commerzbank 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 Commerzbank AG PK 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 Commerzbank i.e., Commerzbank and ConnectOne Bancorp go up and down completely randomly.
Pair Corralation between Commerzbank and ConnectOne Bancorp
Assuming the 90 days horizon Commerzbank AG PK is expected to under-perform the ConnectOne Bancorp. In addition to that, Commerzbank is 1.81 times more volatile than ConnectOne Bancorp. It trades about -0.33 of its total potential returns per unit of risk. ConnectOne Bancorp is currently generating about 0.28 per unit of volatility. If you would invest 2,083 in ConnectOne Bancorp on August 27, 2024 and sell it today you would earn a total of 133.00 from holding ConnectOne Bancorp or generate 6.39% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Commerzbank AG PK vs. ConnectOne Bancorp
Performance |
| Timeline |
| Commerzbank AG PK |
| ConnectOne Bancorp |
Commerzbank and ConnectOne Bancorp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Commerzbank and ConnectOne Bancorp
The main advantage of trading using opposite Commerzbank and ConnectOne Bancorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Commerzbank 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.The idea behind Commerzbank AG PK and ConnectOne 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.| ConnectOne Bancorp vs. Dime Community Bancshares | ConnectOne Bancorp vs. Washington Federal | ConnectOne Bancorp vs. CNB Financial | ConnectOne Bancorp vs. First Guaranty Bancshares |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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