Correlation Between William Penn and ConnectOne Bancorp

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

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

Diversification Opportunities for William Penn and ConnectOne Bancorp

-0.22

Correlation Coefficient

William Penn  ConnectOne Bancorp

Very good diversification

The 3 months correlation between William and ConnectOne is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding William Penn Bancorp and ConnectOne Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ConnectOne Bancorp and William Penn 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 William Penn 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 William Penn i.e., William Penn and ConnectOne Bancorp go up and down completely randomly.

Pair Corralation between William Penn and ConnectOne Bancorp

Given the investment horizon of 90 days William Penn is expected to generate 2.97 times less return on investment than ConnectOne Bancorp. But when comparing it to its historical volatility, William Penn Bancorp is 1.36 times less risky than ConnectOne Bancorp. It trades about 0.01 of its potential returns per unit of risk. ConnectOne Bancorp is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  1,878  in ConnectOne Bancorp on October 22, 2024 and sell it today you would earn a total of  419.00  from holding ConnectOne Bancorp or generate 22.31% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	99.8%
Values	Daily Returns

William Penn Bancorp  vs.  ConnectOne Bancorp

William Penn Bancorp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days William Penn Bancorp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, William Penn is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

ConnectOne Bancorp

Risk-Adjusted Performance

11 of 100

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.

Pair Trading with William Penn and ConnectOne Bancorp

The main advantage of trading using opposite William Penn and ConnectOne Bancorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if William Penn 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 William Penn 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.