Correlation Between FEC Resources and ConnectOne Bancorp

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

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

Diversification Opportunities for FEC Resources and ConnectOne Bancorp

-0.44

Correlation Coefficient

FEC Resources  ConnectOne Bancorp

Very good diversification

The 3 months correlation between FEC and ConnectOne is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding FEC Resources and ConnectOne Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ConnectOne Bancorp and FEC Resources 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 FEC Resources 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 FEC Resources i.e., FEC Resources and ConnectOne Bancorp go up and down completely randomly.

Pair Corralation between FEC Resources and ConnectOne Bancorp

Assuming the 90 days horizon FEC Resources is expected to generate 17.91 times more return on investment than ConnectOne Bancorp. However, FEC Resources is 17.91 times more volatile than ConnectOne Bancorp. It trades about 0.08 of its potential returns per unit of risk. ConnectOne Bancorp is currently generating about 0.09 per unit of risk. If you would invest  0.17  in FEC Resources on September 24, 2024 and sell it today you would earn a total of  0.10  from holding FEC Resources or generate 58.82% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	99.6%
Values	Daily Returns

FEC Resources  vs.  ConnectOne Bancorp

FEC Resources

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in FEC Resources are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, FEC Resources reported solid returns over the last few months and may actually be approaching a breakup point.

ConnectOne Bancorp

Risk-Adjusted Performance

6 of 100

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.

Pair Trading with FEC Resources and ConnectOne Bancorp

The main advantage of trading using opposite FEC Resources and ConnectOne Bancorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FEC Resources 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 FEC Resources 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.