Correlation Between ConnectOne Bancorp and BCB Bancorp

Can any of the company-specific risk be diversified away by investing in both ConnectOne Bancorp and BCB 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 BCB 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 BCB Bancorp, you can compare the effects of market volatilities on ConnectOne Bancorp and BCB 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 BCB Bancorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of ConnectOne Bancorp and BCB Bancorp.

Diversification Opportunities for ConnectOne Bancorp and BCB Bancorp

-0.38

Correlation Coefficient

ConnectOne Bancorp  BCB Bancorp

Very good diversification

The 3 months correlation between ConnectOne and BCB is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding ConnectOne Bancorp and BCB Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BCB 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 BCB Bancorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BCB Bancorp has no effect on the direction of ConnectOne Bancorp i.e., ConnectOne Bancorp and BCB Bancorp go up and down completely randomly.

Pair Corralation between ConnectOne Bancorp and BCB Bancorp

Given the investment horizon of 90 days ConnectOne Bancorp is expected to generate 0.97 times more return on investment than BCB Bancorp. However, ConnectOne Bancorp is 1.03 times less risky than BCB Bancorp. It trades about 0.07 of its potential returns per unit of risk. BCB Bancorp is currently generating about -0.11 per unit of risk. If you would invest  2,255  in ConnectOne Bancorp on December 29, 2024 and sell it today you would earn a total of  165.00  from holding ConnectOne Bancorp or generate 7.32% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

ConnectOne Bancorp  vs.  BCB Bancorp

ConnectOne Bancorp

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in ConnectOne Bancorp are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, ConnectOne Bancorp may actually be approaching a critical reversion point that can send shares even higher in April 2025.

BCB Bancorp

Risk-Adjusted Performance

Very Weak

Over the last 90 days BCB Bancorp has generated negative risk-adjusted returns adding no value to investors with long positions. Even with uncertain performance in the last few months, the Stock's fundamental drivers remain relatively invariable which may send shares a bit higher in April 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with ConnectOne Bancorp and BCB Bancorp

The main advantage of trading using opposite ConnectOne Bancorp and BCB Bancorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ConnectOne Bancorp position performs unexpectedly, BCB 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 BCB Bancorp will offset losses from the drop in BCB Bancorp's long position.

The idea behind ConnectOne Bancorp and BCB 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.

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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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.