Correlation Between Chemung Financial and Citizens Bancorp

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

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

Diversification Opportunities for Chemung Financial and Citizens Bancorp

0.37

Correlation Coefficient

Chemung Financial  Citizens Bancorp

Weak diversification

The 3 months correlation between Chemung and Citizens is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Chemung Financial Corp and Citizens Bancorp Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Citizens Bancorp Inv and Chemung Financial 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 Chemung Financial Corp are associated (or correlated) with Citizens Bancorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Citizens Bancorp Inv has no effect on the direction of Chemung Financial i.e., Chemung Financial and Citizens Bancorp go up and down completely randomly.

Pair Corralation between Chemung Financial and Citizens Bancorp

Given the investment horizon of 90 days Chemung Financial is expected to generate 8.65 times less return on investment than Citizens Bancorp. In addition to that, Chemung Financial is 1.65 times more volatile than Citizens Bancorp Investment. It trades about 0.02 of its total potential returns per unit of risk. Citizens Bancorp Investment is currently generating about 0.31 per unit of volatility. 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

Chemung Financial Corp  vs.  Citizens Bancorp Investment

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 unsteady primary indicators, Chemung Financial may actually be approaching a critical reversion point that can send shares even higher in January 2025.

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.

Pair Trading with Chemung Financial and Citizens Bancorp

The main advantage of trading using opposite Chemung Financial and Citizens Bancorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chemung Financial position performs unexpectedly, Citizens Bancorp 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 Citizens Bancorp will offset losses from the drop in Citizens Bancorp's long position.

The idea behind Chemung Financial Corp and Citizens Bancorp Investment 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.

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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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.