Correlation Between Cashmere Valley and Chemung Financial
Can any of the company-specific risk be diversified away by investing in both Cashmere Valley and Chemung 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 Cashmere Valley and Chemung Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cashmere Valley Bank and Chemung Financial Corp, you can compare the effects of market volatilities on Cashmere Valley and Chemung 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 Cashmere Valley with a short position of Chemung Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cashmere Valley and Chemung Financial.
Diversification Opportunities for Cashmere Valley and Chemung Financial
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Cashmere and Chemung is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Cashmere Valley Bank and Chemung Financial Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chemung Financial Corp and Cashmere Valley 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 Cashmere Valley Bank are associated (or correlated) with Chemung Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chemung Financial Corp has no effect on the direction of Cashmere Valley i.e., Cashmere Valley and Chemung Financial go up and down completely randomly.
Pair Corralation between Cashmere Valley and Chemung Financial
Given the investment horizon of 90 days Cashmere Valley is expected to generate 1.8 times less return on investment than Chemung Financial. But when comparing it to its historical volatility, Cashmere Valley Bank is 2.53 times less risky than Chemung Financial. It trades about 0.32 of its potential returns per unit of risk. Chemung Financial Corp is currently generating about 0.23 of returns per unit of risk over similar time horizon. If you would invest 4,778 in Chemung Financial Corp on September 1, 2024 and sell it today you would earn a total of 455.00 from holding Chemung Financial Corp or generate 9.52% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cashmere Valley Bank vs. Chemung Financial Corp
Performance |
| Timeline |
| Cashmere Valley Bank |
| Chemung Financial Corp |
Cashmere Valley and Chemung Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cashmere Valley and Chemung Financial
The main advantage of trading using opposite Cashmere Valley and Chemung Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cashmere Valley position performs unexpectedly, Chemung 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 Chemung Financial will offset losses from the drop in Chemung Financial's long position.| Cashmere Valley vs. Santa Cruz County | Cashmere Valley vs. Montfort Capital Corp | Cashmere Valley vs. Mullen Group | Cashmere Valley vs. Cartier Resources |
| Chemung Financial vs. Affinity Bancshares | Chemung Financial vs. Southern California Bancorp | Chemung Financial vs. Auburn National Bancorporation | Chemung Financial vs. BayCom 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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