Correlation Between National Bankshares and Chemung Financial
Can any of the company-specific risk be diversified away by investing in both National Bankshares 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 National Bankshares and Chemung Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between National Bankshares and Chemung Financial Corp, you can compare the effects of market volatilities on National Bankshares 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 National Bankshares with a short position of Chemung Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of National Bankshares and Chemung Financial.
Diversification Opportunities for National Bankshares and Chemung Financial
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between National and Chemung is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding National Bankshares 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 National Bankshares 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 National Bankshares 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 National Bankshares i.e., National Bankshares and Chemung Financial go up and down completely randomly.
Pair Corralation between National Bankshares and Chemung Financial
Given the investment horizon of 90 days National Bankshares is expected to generate 0.99 times more return on investment than Chemung Financial. However, National Bankshares is 1.01 times less risky than Chemung Financial. It trades about 0.35 of its potential returns per unit of risk. Chemung Financial Corp is currently generating about 0.23 per unit of risk. If you would invest 2,788 in National Bankshares on September 1, 2024 and sell it today you would earn a total of 422.00 from holding National Bankshares or generate 15.14% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Strong |
Accuracy | 100.0% |
Values | Daily Returns |
National Bankshares vs. Chemung Financial Corp
Performance |
Timeline |
National Bankshares |
Chemung Financial Corp |
National Bankshares and Chemung Financial Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with National Bankshares and Chemung Financial
The main advantage of trading using opposite National Bankshares and Chemung Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if National Bankshares 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.National Bankshares vs. Affinity Bancshares | National Bankshares vs. Southern California Bancorp | National Bankshares vs. Auburn National Bancorporation | National Bankshares vs. BayCom Corp |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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