Correlation Between ConnectOne Bancorp and SCCB

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

Diversification Opportunities for ConnectOne Bancorp and SCCB

0.89
  Correlation Coefficient

Very poor diversification

The 3 months correlation between ConnectOne and SCCB is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding ConnectOne Bancorp and SCCB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SCCB 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 SCCB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SCCB has no effect on the direction of ConnectOne Bancorp i.e., ConnectOne Bancorp and SCCB go up and down completely randomly.

Pair Corralation between ConnectOne Bancorp and SCCB

Assuming the 90 days horizon ConnectOne Bancorp is expected to generate 4.38 times more return on investment than SCCB. However, ConnectOne Bancorp is 4.38 times more volatile than SCCB. It trades about 0.03 of its potential returns per unit of risk. SCCB is currently generating about 0.07 per unit of risk. If you would invest  1,822  in ConnectOne Bancorp on October 3, 2024 and sell it today you would earn a total of  475.00  from holding ConnectOne Bancorp or generate 26.07% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthStrong
Accuracy74.34%
ValuesDaily Returns

ConnectOne Bancorp  vs.  SCCB

 Performance 
       Timeline  
ConnectOne Bancorp 

Risk-Adjusted Performance

11 of 100

 
Weak
 
Strong
Good
Compared to the overall equity markets, risk-adjusted returns on investments in ConnectOne Bancorp are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak fundamental drivers, ConnectOne Bancorp may actually be approaching a critical reversion point that can send shares even higher in February 2025.
SCCB 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days SCCB has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong fundamental indicators, SCCB is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

ConnectOne Bancorp and SCCB Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with ConnectOne Bancorp and SCCB

The main advantage of trading using opposite ConnectOne Bancorp and SCCB positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ConnectOne Bancorp position performs unexpectedly, SCCB 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 SCCB will offset losses from the drop in SCCB's long position.
The idea behind ConnectOne Bancorp and SCCB 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.

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