Correlation Between ConnectOne Bancorp and Provident Financial

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

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

Diversification Opportunities for ConnectOne Bancorp and Provident Financial

0.83

Correlation Coefficient

ConnectOne Bancorp  Provident Financial

Very poor diversification

The 3 months correlation between ConnectOne and Provident is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding ConnectOne Bancorp and Provident Financial Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Provident Financial 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 Provident Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Provident Financial has no effect on the direction of ConnectOne Bancorp i.e., ConnectOne Bancorp and Provident Financial go up and down completely randomly.

Pair Corralation between ConnectOne Bancorp and Provident Financial

Given the investment horizon of 90 days ConnectOne Bancorp is expected to under-perform the Provident Financial. But the stock apears to be less risky and, when comparing its historical volatility, ConnectOne Bancorp is 1.03 times less risky than Provident Financial. The stock trades about -0.04 of its potential returns per unit of risk. The Provident Financial Services is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  1,677  in Provident Financial Services on May 5, 2025 and sell it today you would earn a total of  125.00  from holding Provident Financial Services or generate 7.45% return on investment over 90 days.

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

ConnectOne Bancorp  vs.  Provident Financial Services

ConnectOne Bancorp

Risk-Adjusted Performance

Very Weak

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

Provident Financial

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Provident Financial Services are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unfluctuating technical and fundamental indicators, Provident Financial may actually be approaching a critical reversion point that can send shares even higher in September 2025.

Pair Trading with ConnectOne Bancorp and Provident Financial

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

The idea behind ConnectOne Bancorp and Provident Financial Services 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..