Correlation Between Bank of Botetourt and Chemung Financial
Can any of the company-specific risk be diversified away by investing in both Bank of Botetourt and Chemung 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 Bank of Botetourt and Chemung Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bank of Botetourt and Chemung Financial Corp, you can compare the effects of market volatilities on Bank of Botetourt and Chemung 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 Bank of Botetourt with a short position of Chemung Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of Botetourt and Chemung Financial.
Diversification Opportunities for Bank of Botetourt and Chemung Financial
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Bank and Chemung is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Bank of Botetourt and Chemung Financial Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chemung Financial Corp and Bank of Botetourt 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 Bank of Botetourt are associated (or correlated) with Chemung Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chemung Financial Corp has no effect on the direction of Bank of Botetourt i.e., Bank of Botetourt and Chemung Financial go up and down completely randomly.
Pair Corralation between Bank of Botetourt and Chemung Financial
Given the investment horizon of 90 days Bank of Botetourt is expected to generate 3.81 times less return on investment than Chemung Financial. But when comparing it to its historical volatility, Bank of Botetourt is 3.24 times less risky than Chemung Financial. It trades about 0.19 of its potential returns per unit of risk. Chemung Financial Corp is currently generating about 0.23 of returns per unit of risk over similar time horizon. If you would invest 4,778 in Chemung Financial Corp on September 1, 2024 and sell it today you would earn a total of 455.00 from holding Chemung Financial Corp or generate 9.52% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bank of Botetourt vs. Chemung Financial Corp
Performance |
| Timeline |
| Bank of Botetourt |
| Chemung Financial Corp |
Bank of Botetourt and Chemung Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of Botetourt and Chemung Financial
The main advantage of trading using opposite Bank of Botetourt and Chemung Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of Botetourt position performs unexpectedly, Chemung 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 Chemung Financial will offset losses from the drop in Chemung Financial's long position.| Bank of Botetourt vs. Century Financial Corp | Bank of Botetourt vs. FS Bancorp | Bank of Botetourt vs. Lyons Bancorp | Bank of Botetourt vs. Solvay Bank Corp |
| Chemung Financial vs. Affinity Bancshares | Chemung Financial vs. Southern California Bancorp | Chemung Financial vs. Auburn National Bancorporation | Chemung Financial vs. BayCom Corp |
Check out your portfolio center.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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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