Correlation Between Chemung Financial and ESSA Bancorp
Can any of the company-specific risk be diversified away by investing in both Chemung Financial and ESSA 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 Chemung Financial and ESSA Bancorp 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 ESSA Bancorp, you can compare the effects of market volatilities on Chemung Financial and ESSA 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 Chemung Financial with a short position of ESSA Bancorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chemung Financial and ESSA Bancorp.
Diversification Opportunities for Chemung Financial and ESSA Bancorp
0.48 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Chemung and ESSA is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Chemung Financial Corp and ESSA Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ESSA Bancorp 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 ESSA Bancorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ESSA Bancorp has no effect on the direction of Chemung Financial i.e., Chemung Financial and ESSA Bancorp go up and down completely randomly.
Pair Corralation between Chemung Financial and ESSA Bancorp
Given the investment horizon of 90 days Chemung Financial is expected to generate 1.2 times less return on investment than ESSA Bancorp. In addition to that, Chemung Financial is 2.6 times more volatile than ESSA Bancorp. It trades about 0.1 of its total potential returns per unit of risk. ESSA Bancorp is currently generating about 0.32 per unit of volatility. If you would invest 1,914 in ESSA Bancorp on November 3, 2024 and sell it today you would earn a total of 177.00 from holding ESSA Bancorp or generate 9.25% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Chemung Financial Corp vs. ESSA Bancorp
Performance |
| Timeline |
| Chemung Financial Corp |
| ESSA Bancorp |
Chemung Financial and ESSA Bancorp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Chemung Financial and ESSA Bancorp
The main advantage of trading using opposite Chemung Financial and ESSA Bancorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chemung Financial position performs unexpectedly, ESSA 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 ESSA Bancorp will offset losses from the drop in ESSA Bancorp'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 |
| ESSA Bancorp vs. Community West Bancshares | ESSA Bancorp vs. First Northwest Bancorp | ESSA Bancorp vs. First Community | ESSA Bancorp vs. Oak Valley 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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