Correlation Between Orange County and Chemung Financial
Can any of the company-specific risk be diversified away by investing in both Orange County 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 Orange County and Chemung Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Orange County Bancorp and Chemung Financial Corp, you can compare the effects of market volatilities on Orange County 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 Orange County with a short position of Chemung Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Orange County and Chemung Financial.
Diversification Opportunities for Orange County and Chemung Financial
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Orange and Chemung is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Orange County 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 Orange County 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 Orange County 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 Orange County i.e., Orange County and Chemung Financial go up and down completely randomly.
Pair Corralation between Orange County and Chemung Financial
Considering the 90-day investment horizon Orange County Bancorp is expected to generate 2.11 times more return on investment than Chemung Financial. However, Orange County is 2.11 times more volatile than Chemung Financial Corp. It trades about 0.03 of its potential returns per unit of risk. Chemung Financial Corp is currently generating about 0.03 per unit of risk. If you would invest 4,566 in Orange County Bancorp on August 31, 2024 and sell it today you would earn a total of 1,398 from holding Orange County Bancorp or generate 30.62% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Orange County Bancorp vs. Chemung Financial Corp
Performance |
| Timeline |
| Orange County Bancorp |
| Chemung Financial Corp |
Orange County and Chemung Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Orange County and Chemung Financial
The main advantage of trading using opposite Orange County and Chemung Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Orange County 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.| Orange County vs. KeyCorp | Orange County vs. Comerica | Orange County vs. First Horizon National | Orange County vs. Western Alliance Bancorporation |
| Chemung Financial vs. KeyCorp | Chemung Financial vs. Comerica | Chemung Financial vs. First Horizon National | Chemung Financial vs. Western Alliance Bancorporation |
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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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