Correlation Between Chemung Financial and First Financial
Can any of the company-specific risk be diversified away by investing in both Chemung Financial and First Financial 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 Financial 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 Financial, you can compare the effects of market volatilities on Chemung Financial and First Financial 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 Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chemung Financial and First Financial.
Diversification Opportunities for Chemung Financial and First Financial
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Chemung and First is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Chemung Financial Corp and First Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First 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 First Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Financial has no effect on the direction of Chemung Financial i.e., Chemung Financial and First Financial go up and down completely randomly.
Pair Corralation between Chemung Financial and First Financial
Given the investment horizon of 90 days Chemung Financial is expected to generate 1.37 times less return on investment than First Financial. In addition to that, Chemung Financial is 1.99 times more volatile than First Financial. It trades about 0.16 of its total potential returns per unit of risk. First Financial is currently generating about 0.44 per unit of volatility. If you would invest 4,471 in First Financial on November 9, 2024 and sell it today you would earn a total of 760.00 from holding First Financial or generate 17.0% 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. First Financial
Performance |
| Timeline |
| Chemung Financial Corp |
| First Financial |
Chemung Financial and First Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Chemung Financial and First Financial
The main advantage of trading using opposite Chemung Financial and First Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chemung Financial position performs unexpectedly, First Financial 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 Financial will offset losses from the drop in First Financial'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 Financial vs. Chemung Financial Corp | First Financial vs. Citizens Northern Corp | First Financial vs. National Bankshares | First Financial vs. Fidelity DD 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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