Correlation Between Chemung Financial and First Capital
Can any of the company-specific risk be diversified away by investing in both Chemung Financial and First Capital 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 First Capital 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 First Capital, you can compare the effects of market volatilities on Chemung Financial and First Capital 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 First Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chemung Financial and First Capital.
Diversification Opportunities for Chemung Financial and First Capital
-0.41 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Chemung and First is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding Chemung Financial Corp and First Capital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Capital 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 First Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Capital has no effect on the direction of Chemung Financial i.e., Chemung Financial and First Capital go up and down completely randomly.
Pair Corralation between Chemung Financial and First Capital
Given the investment horizon of 90 days Chemung Financial Corp is expected to generate 1.74 times more return on investment than First Capital. However, Chemung Financial is 1.74 times more volatile than First Capital. It trades about 0.09 of its potential returns per unit of risk. First Capital is currently generating about -0.03 per unit of risk. If you would invest 4,881 in Chemung Financial Corp on November 1, 2024 and sell it today you would earn a total of 260.00 from holding Chemung Financial Corp or generate 5.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Chemung Financial Corp vs. First Capital
Performance |
| Timeline |
| Chemung Financial Corp |
| First Capital |
Chemung Financial and First Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Chemung Financial and First Capital
The main advantage of trading using opposite Chemung Financial and First Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chemung Financial position performs unexpectedly, First Capital 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 First Capital will offset losses from the drop in First Capital'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 |
| First Capital vs. Home Federal Bancorp | First Capital vs. First Financial Northwest | First Capital vs. First Northwest Bancorp | First Capital vs. Community West Bancshares |
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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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