Correlation Between Chemung Financial and Kearny Financial

Can any of the company-specific risk be diversified away by investing in both Chemung Financial and Kearny 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 Chemung Financial and Kearny Financial 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 Kearny Financial Corp, you can compare the effects of market volatilities on Chemung Financial and Kearny 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 Chemung Financial with a short position of Kearny Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chemung Financial and Kearny Financial.

Diversification Opportunities for Chemung Financial and Kearny Financial

0.87

Correlation Coefficient

Chemung Financial  Kearny Financial

Very poor diversification

The 3 months correlation between Chemung and Kearny is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Chemung Financial Corp and Kearny Financial Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kearny Financial Corp 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 Kearny Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kearny Financial Corp has no effect on the direction of Chemung Financial i.e., Chemung Financial and Kearny Financial go up and down completely randomly.

Pair Corralation between Chemung Financial and Kearny Financial

Given the investment horizon of 90 days Chemung Financial Corp is expected to generate 0.52 times more return on investment than Kearny Financial. However, Chemung Financial Corp is 1.92 times less risky than Kearny Financial. It trades about 0.07 of its potential returns per unit of risk. Kearny Financial Corp is currently generating about 0.02 per unit of risk. If you would invest  4,721  in Chemung Financial Corp on September 30, 2024 and sell it today you would earn a total of  219.00  from holding Chemung Financial Corp or generate 4.64% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	100.0%
Values	Daily Returns

Chemung Financial Corp  vs.  Kearny Financial Corp

Chemung Financial Corp

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Chemung Financial Corp are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable primary indicators, Chemung Financial is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Kearny Financial Corp

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Kearny Financial Corp are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unsteady basic indicators, Kearny Financial may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Chemung Financial and Kearny Financial

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

The idea behind Chemung Financial Corp and Kearny 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.

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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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.