Correlation Between Citizens Northern and Chemung Financial

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

Diversification Opportunities for Citizens Northern and Chemung Financial

0.69

Correlation Coefficient

Citizens Northern  Chemung Financial

Poor diversification

The 3 months correlation between Citizens and Chemung is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Citizens Northern Corp 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 Northern 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 Northern Corp 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 Northern i.e., Citizens Northern and Chemung Financial go up and down completely randomly.

Pair Corralation between Citizens Northern and Chemung Financial

Given the investment horizon of 90 days Citizens Northern Corp is expected to generate 0.82 times more return on investment than Chemung Financial. However, Citizens Northern Corp is 1.21 times less risky than Chemung Financial. It trades about 0.11 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  1,817  in Citizens Northern Corp on December 29, 2024 and sell it today you would earn a total of  247.00  from holding Citizens Northern Corp or generate 13.59% return on investment over 90 days.

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

Citizens Northern Corp  vs.  Chemung Financial Corp

Citizens Northern Corp

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Citizens Northern Corp are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak basic indicators, Citizens Northern exhibited solid returns over the last few months and may actually be approaching a breakup point.

Chemung Financial Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days Chemung Financial Corp has generated negative risk-adjusted returns adding no value to investors with long positions. 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.

Pair Trading with Citizens Northern and Chemung Financial

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

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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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.