Correlation Between Chemung Financial and Southern First
Can any of the company-specific risk be diversified away by investing in both Chemung Financial and Southern 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 Southern 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 Southern First Bancshares, you can compare the effects of market volatilities on Chemung Financial and Southern 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 Southern First. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chemung Financial and Southern First.
Diversification Opportunities for Chemung Financial and Southern First
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Chemung and Southern is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Chemung Financial Corp and Southern First Bancshares in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Southern First Bancshares 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 Southern First. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Southern First Bancshares has no effect on the direction of Chemung Financial i.e., Chemung Financial and Southern First go up and down completely randomly.
Pair Corralation between Chemung Financial and Southern First
Given the investment horizon of 90 days Chemung Financial Corp is expected to generate 1.88 times more return on investment than Southern First. However, Chemung Financial is 1.88 times more volatile than Southern First Bancshares. It trades about 0.15 of its potential returns per unit of risk. Southern First Bancshares is currently generating about -0.08 per unit of risk. If you would invest 4,710 in Chemung Financial Corp on November 18, 2024 and sell it today you would earn a total of 471.00 from holding Chemung Financial Corp or generate 10.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Chemung Financial Corp vs. Southern First Bancshares
Performance |
| Timeline |
| Chemung Financial Corp |
| Southern First Bancshares |
Chemung Financial and Southern First Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Chemung Financial and Southern First
The main advantage of trading using opposite Chemung Financial and Southern First positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chemung Financial position performs unexpectedly, Southern 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 Southern First will offset losses from the drop in Southern 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 |
| Southern First vs. First Community | Southern First vs. Old Point Financial | Southern First vs. Oak Valley Bancorp | Southern First vs. Chemung Financial 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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