Correlation Between Evans Bancorp and ConnectOne Bancorp

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

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

Diversification Opportunities for Evans Bancorp and ConnectOne Bancorp

-0.27

Correlation Coefficient

Evans Bancorp  ConnectOne Bancorp

Very good diversification

The 3 months correlation between Evans and ConnectOne is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding Evans Bancorp and ConnectOne Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ConnectOne Bancorp and Evans 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 Evans Bancorp 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 Evans Bancorp i.e., Evans Bancorp and ConnectOne Bancorp go up and down completely randomly.

Pair Corralation between Evans Bancorp and ConnectOne Bancorp

Given the investment horizon of 90 days Evans Bancorp is expected to under-perform the ConnectOne Bancorp. In addition to that, Evans Bancorp is 1.89 times more volatile than ConnectOne Bancorp. It trades about -0.11 of its total potential returns per unit of risk. ConnectOne Bancorp is currently generating about 0.1 per unit of volatility. If you would invest  2,195  in ConnectOne Bancorp on December 23, 2024 and sell it today you would earn a total of  105.00  from holding ConnectOne Bancorp or generate 4.78% return on investment over 90 days.

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

Evans Bancorp  vs.  ConnectOne Bancorp

Evans Bancorp

Risk-Adjusted Performance

Very Weak

Over the last 90 days Evans Bancorp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Stock's fundamental drivers remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

ConnectOne Bancorp

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in ConnectOne Bancorp are ranked lower than 7 (%) 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.

Pair Trading with Evans Bancorp and ConnectOne Bancorp

The main advantage of trading using opposite Evans Bancorp and ConnectOne Bancorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Evans Bancorp 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.

The idea behind Evans Bancorp and ConnectOne 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.