Correlation Between Home Federal and Chemung Financial
Can any of the company-specific risk be diversified away by investing in both Home Federal 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 Home Federal and Chemung Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Home Federal Bancorp and Chemung Financial Corp, you can compare the effects of market volatilities on Home Federal 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 Home Federal with a short position of Chemung Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Home Federal and Chemung Financial.
Diversification Opportunities for Home Federal and Chemung Financial
-0.53 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Home and Chemung is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding Home Federal 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 Home Federal 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 Home Federal 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 Home Federal i.e., Home Federal and Chemung Financial go up and down completely randomly.
Pair Corralation between Home Federal and Chemung Financial
Given the investment horizon of 90 days Home Federal Bancorp is expected to generate 0.97 times more return on investment than Chemung Financial. However, Home Federal Bancorp is 1.04 times less risky than Chemung Financial. It trades about 0.02 of its potential returns per unit of risk. Chemung Financial Corp is currently generating about 0.02 per unit of risk. If you would invest 1,251 in Home Federal Bancorp on November 8, 2024 and sell it today you would earn a total of 19.00 from holding Home Federal Bancorp or generate 1.52% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 90.0% |
| Values | Daily Returns |
Home Federal Bancorp vs. Chemung Financial Corp
Performance |
| Timeline |
| Home Federal Bancorp |
| Chemung Financial Corp |
Home Federal and Chemung Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Home Federal and Chemung Financial
The main advantage of trading using opposite Home Federal and Chemung Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Home Federal 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.The idea behind Home Federal Bancorp and Chemung Financial Corp pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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