Correlation Between Northfield Bancorp and ConnectOne Bancorp

Can any of the company-specific risk be diversified away by investing in both Northfield 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 Northfield 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 Northfield Bancorp and ConnectOne Bancorp, you can compare the effects of market volatilities on Northfield 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 Northfield Bancorp with a short position of ConnectOne Bancorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Northfield Bancorp and ConnectOne Bancorp.

Diversification Opportunities for Northfield Bancorp and ConnectOne Bancorp

0.22

Correlation Coefficient

Northfield Bancorp  ConnectOne Bancorp

Modest diversification

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

Pair Corralation between Northfield Bancorp and ConnectOne Bancorp

Given the investment horizon of 90 days Northfield Bancorp is expected to under-perform the ConnectOne Bancorp. In addition to that, Northfield Bancorp is 1.04 times more volatile than ConnectOne Bancorp. It trades about -0.03 of its total potential returns per unit of risk. ConnectOne Bancorp is currently generating about -0.02 per unit of volatility. If you would invest  2,328  in ConnectOne Bancorp on May 7, 2025 and sell it today you would lose (60.00) from holding ConnectOne Bancorp or give up 2.58% of portfolio value over 90 days.

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

Northfield Bancorp  vs.  ConnectOne Bancorp

Northfield Bancorp

Risk-Adjusted Performance

Weakest

Over the last 90 days Northfield Bancorp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent fundamental drivers, Northfield Bancorp is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

ConnectOne Bancorp

Risk-Adjusted Performance

Weakest

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.

Pair Trading with Northfield Bancorp and ConnectOne Bancorp

The main advantage of trading using opposite Northfield Bancorp and ConnectOne Bancorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Northfield 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 Northfield 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.