Correlation Between First Northwest and Chemung Financial
Can any of the company-specific risk be diversified away by investing in both First Northwest 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 First Northwest and Chemung Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between First Northwest Bancorp and Chemung Financial Corp, you can compare the effects of market volatilities on First Northwest 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 First Northwest with a short position of Chemung Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Northwest and Chemung Financial.
Diversification Opportunities for First Northwest and Chemung Financial
0.48 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between First and Chemung is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding First Northwest Bancorp 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 First Northwest 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 First Northwest Bancorp 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 First Northwest i.e., First Northwest and Chemung Financial go up and down completely randomly.
Pair Corralation between First Northwest and Chemung Financial
Given the investment horizon of 90 days First Northwest is expected to generate 1.46 times less return on investment than Chemung Financial. But when comparing it to its historical volatility, First Northwest Bancorp is 2.59 times less risky than Chemung Financial. It trades about 0.15 of its potential returns per unit of risk. Chemung Financial Corp is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 4,881 in Chemung Financial Corp on November 1, 2024 and sell it today you would earn a total of 260.00 from holding Chemung Financial Corp or generate 5.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
First Northwest Bancorp vs. Chemung Financial Corp
Performance |
| Timeline |
| First Northwest Bancorp |
| Chemung Financial Corp |
First Northwest and Chemung Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Northwest and Chemung Financial
The main advantage of trading using opposite First Northwest and Chemung Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Northwest 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.| First Northwest vs. Home Federal Bancorp | First Northwest vs. First Financial Northwest | First Northwest vs. First Capital | First Northwest vs. Community West Bancshares |
| Chemung Financial vs. Finward Bancorp | Chemung Financial vs. Community West Bancshares | Chemung Financial vs. First Financial Northwest | Chemung Financial vs. Oak Valley 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
Other Complementary Tools
| Watchlist Optimization Optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm | |
| Portfolio Comparator Compare the composition, asset allocations and performance of any two portfolios in your account | |
| Piotroski F Score Get Piotroski F Score based on the binary analysis strategy of nine different fundamentals | |
| Price Ceiling Movement Calculate and plot Price Ceiling Movement for different equity instruments | |
| Portfolio Analyzer Portfolio analysis module that provides access to portfolio diagnostics and optimization engine |