Correlation Between Citizens Bancorp and Chemung Financial

Can any of the company-specific risk be diversified away by investing in both Citizens Bancorp 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 Citizens Bancorp and Chemung Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Citizens Bancorp Investment and Chemung Financial Corp, you can compare the effects of market volatilities on Citizens Bancorp 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 Citizens Bancorp with a short position of Chemung Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citizens Bancorp and Chemung Financial.

Diversification Opportunities for Citizens Bancorp and Chemung Financial

0.37

Correlation Coefficient

Citizens Bancorp  Chemung Financial

Weak diversification

The 3 months correlation between Citizens and Chemung is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Citizens Bancorp Investment 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 Citizens Bancorp 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 Citizens Bancorp Investment 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 Citizens Bancorp i.e., Citizens Bancorp and Chemung Financial go up and down completely randomly.

Pair Corralation between Citizens Bancorp and Chemung Financial

Given the investment horizon of 90 days Citizens Bancorp Investment is expected to generate 0.61 times more return on investment than Chemung Financial. However, Citizens Bancorp Investment is 1.65 times less risky than Chemung Financial. It trades about 0.31 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  2,400  in Citizens Bancorp Investment on September 21, 2024 and sell it today you would earn a total of  155.00  from holding Citizens Bancorp Investment or generate 6.46% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	95.45%
Values	Daily Returns

Citizens Bancorp Investment  vs.  Chemung Financial Corp

Citizens Bancorp Inv

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Citizens Bancorp Investment are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Citizens Bancorp is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Chemung Financial Corp

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Chemung Financial Corp are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly unfluctuating primary indicators, Chemung Financial may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Citizens Bancorp and Chemung Financial

The main advantage of trading using opposite Citizens Bancorp and Chemung Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citizens Bancorp 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 Citizens Bancorp Investment 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.

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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.