Correlation Between Chemung Financial and Main Street
Can any of the company-specific risk be diversified away by investing in both Chemung Financial and Main Street 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 Main Street 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 Main Street Financial, you can compare the effects of market volatilities on Chemung Financial and Main Street 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 Main Street. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chemung Financial and Main Street.
Diversification Opportunities for Chemung Financial and Main Street
0.23 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Chemung and Main is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Chemung Financial Corp and Main Street Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Main Street Financial 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 Main Street. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Main Street Financial has no effect on the direction of Chemung Financial i.e., Chemung Financial and Main Street go up and down completely randomly.
Pair Corralation between Chemung Financial and Main Street
Given the investment horizon of 90 days Chemung Financial Corp is expected to generate 0.82 times more return on investment than Main Street. However, Chemung Financial Corp is 1.22 times less risky than Main Street. It trades about 0.04 of its potential returns per unit of risk. Main Street Financial is currently generating about -0.03 per unit of risk. If you would invest 3,865 in Chemung Financial Corp on November 27, 2024 and sell it today you would earn a total of 1,243 from holding Chemung Financial Corp or generate 32.16% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Chemung Financial Corp vs. Main Street Financial
Performance |
| Timeline |
| Chemung Financial Corp |
| Main Street Financial |
Chemung Financial and Main Street Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Chemung Financial and Main Street
The main advantage of trading using opposite Chemung Financial and Main Street positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chemung Financial position performs unexpectedly, Main Street 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 Main Street will offset losses from the drop in Main Street'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 |
| Main Street vs. CCFNB Bancorp | Main Street vs. Burke Herbert Financial | Main Street vs. First IC | Main Street vs. Enterprise Financial Services |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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