The 19-year-old joins the Hoops until the end of the season, providing cover for club captain Lee Henderson as he faces an extended spell on the sidelines.
The youngster signed his first professional deal with the Hornets in 2016 having been part of the club's youth set-up for eight years.
Stevens was an integral part of the Hornets' title-winning under-18 side in 2015/16, going on to feature regularly for the under-23s before an injury brought his season to an end.
Speaking to the club`s official Pitchero website, manager Mark Jones explained the rationale behind the signing: "We’ve managed to bring in Connor Stevens, who is a centre half, on loan from Watford until the end of the season.
“He’s a young pro there, and someone who I have worked with before, so he comes into the squad and gives us some competition at the back.”
Stevens will be available for the Hoops' short trip to Hungerford Town this weekend.