Correlation Between Chemung Financial and Bank First
Can any of the company-specific risk be diversified away by investing in both Chemung Financial and Bank First 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 Chemung Financial and Bank First into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Chemung Financial Corp and Bank First National, you can compare the effects of market volatilities on Chemung Financial and Bank First 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 Chemung Financial with a short position of Bank First. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chemung Financial and Bank First.
Diversification Opportunities for Chemung Financial and Bank First
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Chemung and Bank is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Chemung Financial Corp and Bank First National in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bank First National and Chemung Financial 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 Chemung Financial Corp are associated (or correlated) with Bank First. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bank First National has no effect on the direction of Chemung Financial i.e., Chemung Financial and Bank First go up and down completely randomly.
Pair Corralation between Chemung Financial and Bank First
Given the investment horizon of 90 days Chemung Financial is expected to generate 1.62 times less return on investment than Bank First. But when comparing it to its historical volatility, Chemung Financial Corp is 1.96 times less risky than Bank First. It trades about 0.22 of its potential returns per unit of risk. Bank First National is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest 9,173 in Bank First National on August 25, 2024 and sell it today you would earn a total of 1,288 from holding Bank First National or generate 14.05% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 95.65% |
| Values | Daily Returns |
Chemung Financial Corp vs. Bank First National
Performance |
| Timeline |
| Chemung Financial Corp |
| Bank First National |
Chemung Financial and Bank First Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Chemung Financial and Bank First
The main advantage of trading using opposite Chemung Financial and Bank First positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chemung Financial position performs unexpectedly, Bank First 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 Bank First will offset losses from the drop in Bank First's long position.| Chemung Financial vs. Finward Bancorp | Chemung Financial vs. Community West Bancshares | Chemung Financial vs. First Financial Northwest | Chemung Financial vs. Oak Valley Bancorp |
| Bank First vs. Norwood Financial Corp | Bank First vs. Chemung Financial Corp | Bank First vs. Home Federal Bancorp | Bank First vs. Rhinebeck Bancorp |
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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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