Correlation Between ConnectOne Bancorp and Yellow Pages

Can any of the company-specific risk be diversified away by investing in both ConnectOne Bancorp and Yellow Pages 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 Yellow Pages into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between ConnectOne Bancorp and Yellow Pages Limited, you can compare the effects of market volatilities on ConnectOne Bancorp and Yellow Pages 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 Yellow Pages. Check out your portfolio center. Please also check ongoing floating volatility patterns of ConnectOne Bancorp and Yellow Pages.

Diversification Opportunities for ConnectOne Bancorp and Yellow Pages

0.36

Correlation Coefficient

ConnectOne Bancorp  Yellow Pages

Weak diversification

The 3 months correlation between ConnectOne and Yellow is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding ConnectOne Bancorp and Yellow Pages Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Yellow Pages Limited 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 Yellow Pages. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Yellow Pages Limited has no effect on the direction of ConnectOne Bancorp i.e., ConnectOne Bancorp and Yellow Pages go up and down completely randomly.

Pair Corralation between ConnectOne Bancorp and Yellow Pages

Assuming the 90 days horizon ConnectOne Bancorp is expected to generate 0.15 times more return on investment than Yellow Pages. However, ConnectOne Bancorp is 6.78 times less risky than Yellow Pages. It trades about 0.08 of its potential returns per unit of risk. Yellow Pages Limited is currently generating about -0.01 per unit of risk. If you would invest  2,205  in ConnectOne Bancorp on December 28, 2024 and sell it today you would earn a total of  79.00  from holding ConnectOne Bancorp or generate 3.58% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	88.52%
Values	Daily Returns

ConnectOne Bancorp  vs.  Yellow Pages Limited

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. 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.

Yellow Pages Limited

Risk-Adjusted Performance

Very Weak

Over the last 90 days Yellow Pages Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable fundamental indicators, Yellow Pages is not utilizing all of its potentials. The recent stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with ConnectOne Bancorp and Yellow Pages

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

The idea behind ConnectOne Bancorp and Yellow Pages Limited 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..