Correlation Between Investar Holding and ConnectOne Bancorp
Can any of the company-specific risk be diversified away by investing in both Investar Holding 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 Investar Holding and ConnectOne Bancorp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Investar Holding Corp and ConnectOne Bancorp, you can compare the effects of market volatilities on Investar Holding 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 Investar Holding with a short position of ConnectOne Bancorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Investar Holding and ConnectOne Bancorp.
Diversification Opportunities for Investar Holding and ConnectOne Bancorp
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Investar and ConnectOne is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Investar Holding Corp and ConnectOne Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ConnectOne Bancorp and Investar Holding 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 Investar Holding Corp 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 Investar Holding i.e., Investar Holding and ConnectOne Bancorp go up and down completely randomly.
Pair Corralation between Investar Holding and ConnectOne Bancorp
Given the investment horizon of 90 days Investar Holding Corp is expected to generate 3.28 times more return on investment than ConnectOne Bancorp. However, Investar Holding is 3.28 times more volatile than ConnectOne Bancorp. It trades about 0.21 of its potential returns per unit of risk. ConnectOne Bancorp is currently generating about 0.4 per unit of risk. If you would invest 2,087 in Investar Holding Corp on September 1, 2024 and sell it today you would earn a total of 295.00 from holding Investar Holding Corp or generate 14.14% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Investar Holding Corp vs. ConnectOne Bancorp
Performance |
| Timeline |
| Investar Holding Corp |
| ConnectOne Bancorp |
Investar Holding and ConnectOne Bancorp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Investar Holding and ConnectOne Bancorp
The main advantage of trading using opposite Investar Holding and ConnectOne Bancorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Investar Holding 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.| Investar Holding vs. Magyar Bancorp | Investar Holding vs. Home Federal Bancorp | Investar Holding vs. Community West Bancshares | Investar Holding vs. First Northwest Bancorp |
| ConnectOne Bancorp vs. KeyCorp | ConnectOne Bancorp vs. KeyCorp | ConnectOne Bancorp vs. Fifth Third Bancorp | ConnectOne Bancorp vs. Citizens Financial Group |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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