Correlation Between ConnectOne Bancorp and Goodheart Willcox

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Can any of the company-specific risk be diversified away by investing in both ConnectOne Bancorp and Goodheart Willcox 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 Goodheart Willcox into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ConnectOne Bancorp and The Goodheart Willcox, you can compare the effects of market volatilities on ConnectOne Bancorp and Goodheart Willcox 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 Goodheart Willcox. Check out your portfolio center. Please also check ongoing floating volatility patterns of ConnectOne Bancorp and Goodheart Willcox.

Diversification Opportunities for ConnectOne Bancorp and Goodheart Willcox

-0.55
  Correlation Coefficient

Excellent diversification

The 3 months correlation between ConnectOne and Goodheart is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding ConnectOne Bancorp and The Goodheart Willcox in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Goodheart Willcox 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 Goodheart Willcox. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Goodheart Willcox has no effect on the direction of ConnectOne Bancorp i.e., ConnectOne Bancorp and Goodheart Willcox go up and down completely randomly.

Pair Corralation between ConnectOne Bancorp and Goodheart Willcox

Assuming the 90 days horizon ConnectOne Bancorp is expected to generate 22.5 times less return on investment than Goodheart Willcox. But when comparing it to its historical volatility, ConnectOne Bancorp is 10.45 times less risky than Goodheart Willcox. It trades about 0.06 of its potential returns per unit of risk. The Goodheart Willcox is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  40,000  in The Goodheart Willcox on September 24, 2024 and sell it today you would earn a total of  3,500  from holding The Goodheart Willcox or generate 8.75% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthVery Weak
Accuracy95.24%
ValuesDaily Returns

ConnectOne Bancorp  vs.  The Goodheart Willcox

 Performance 
       Timeline  
ConnectOne Bancorp 

Risk-Adjusted Performance

6 of 100

 
Weak
 
Strong
Modest
Compared to the overall equity markets, risk-adjusted returns on investments in ConnectOne Bancorp are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable fundamental drivers, ConnectOne Bancorp is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.
Goodheart Willcox 

Risk-Adjusted Performance

1 of 100

 
Weak
 
Strong
Weak
Compared to the overall equity markets, risk-adjusted returns on investments in The Goodheart Willcox are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong basic indicators, Goodheart Willcox is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

ConnectOne Bancorp and Goodheart Willcox Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with ConnectOne Bancorp and Goodheart Willcox

The main advantage of trading using opposite ConnectOne Bancorp and Goodheart Willcox positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ConnectOne Bancorp position performs unexpectedly, Goodheart Willcox 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 Goodheart Willcox will offset losses from the drop in Goodheart Willcox's long position.
The idea behind ConnectOne Bancorp and The Goodheart Willcox 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.

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