Correlation Between ConnectOne Bancorp and Hamilton Lane

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

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

Diversification Opportunities for ConnectOne Bancorp and Hamilton Lane

0.77

Correlation Coefficient

ConnectOne Bancorp  Hamilton Lane

Poor diversification

The 3 months correlation between ConnectOne and Hamilton is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding ConnectOne Bancorp and Hamilton Lane in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hamilton Lane 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 Hamilton Lane. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hamilton Lane has no effect on the direction of ConnectOne Bancorp i.e., ConnectOne Bancorp and Hamilton Lane go up and down completely randomly.

Pair Corralation between ConnectOne Bancorp and Hamilton Lane

Given the investment horizon of 90 days ConnectOne Bancorp is expected to generate 1.81 times less return on investment than Hamilton Lane. In addition to that, ConnectOne Bancorp is 1.62 times more volatile than Hamilton Lane. It trades about 0.08 of its total potential returns per unit of risk. Hamilton Lane is currently generating about 0.25 per unit of volatility. If you would invest  14,806  in Hamilton Lane on September 3, 2024 and sell it today you would earn a total of  4,386  from holding Hamilton Lane or generate 29.62% return on investment over 90 days.

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

ConnectOne Bancorp  vs.  Hamilton Lane

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. Despite somewhat weak basic indicators, ConnectOne Bancorp sustained solid returns over the last few months and may actually be approaching a breakup point.

Hamilton Lane

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Hamilton Lane are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile basic indicators, Hamilton Lane exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with ConnectOne Bancorp and Hamilton Lane

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

The idea behind ConnectOne Bancorp and Hamilton Lane 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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.