Correlation Between Chemung Financial and Waterstone Financial
Can any of the company-specific risk be diversified away by investing in both Chemung Financial and Waterstone 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 Waterstone 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 Waterstone Financial, you can compare the effects of market volatilities on Chemung Financial and Waterstone 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 Waterstone Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chemung Financial and Waterstone Financial.
Diversification Opportunities for Chemung Financial and Waterstone Financial
0.56 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Chemung and Waterstone is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Chemung Financial Corp and Waterstone Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Waterstone 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 Waterstone Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Waterstone Financial has no effect on the direction of Chemung Financial i.e., Chemung Financial and Waterstone Financial go up and down completely randomly.
Pair Corralation between Chemung Financial and Waterstone Financial
Given the investment horizon of 90 days Chemung Financial Corp is expected to generate 0.7 times more return on investment than Waterstone Financial. However, Chemung Financial Corp is 1.43 times less risky than Waterstone Financial. It trades about 0.24 of its potential returns per unit of risk. Waterstone Financial is currently generating about 0.1 per unit of risk. If you would invest 4,679 in Chemung Financial Corp on August 26, 2024 and sell it today you would earn a total of 461.00 from holding Chemung Financial Corp or generate 9.85% 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. Waterstone Financial
Performance |
| Timeline |
| Chemung Financial Corp |
| Waterstone Financial |
Chemung Financial and Waterstone Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Chemung Financial and Waterstone Financial
The main advantage of trading using opposite Chemung Financial and Waterstone Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chemung Financial position performs unexpectedly, Waterstone 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 Waterstone Financial will offset losses from the drop in Waterstone 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 |
| Waterstone Financial vs. National Bank Holdings | Waterstone Financial vs. Community West Bancshares | Waterstone Financial vs. Financial Institutions | Waterstone Financial vs. Kearny 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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