Correlation Between Nu Holdings and Chemung Financial

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

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

Diversification Opportunities for Nu Holdings and Chemung Financial

-0.33

Correlation Coefficient

Nu Holdings  Chemung Financial

Very good diversification

The 3 months correlation between Nu Holdings and Chemung is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding Nu Holdings 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 Nu Holdings 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 Nu Holdings 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 Nu Holdings i.e., Nu Holdings and Chemung Financial go up and down completely randomly.

Pair Corralation between Nu Holdings and Chemung Financial

Allowing for the 90-day total investment horizon Nu Holdings is expected to under-perform the Chemung Financial. In addition to that, Nu Holdings is 2.17 times more volatile than Chemung Financial Corp. It trades about -0.23 of its total potential returns per unit of risk. Chemung Financial Corp is currently generating about -0.1 per unit of volatility. If you would invest  5,090  in Chemung Financial Corp on October 7, 2024 and sell it today you would lose (312.00) from holding Chemung Financial Corp or give up 6.13% of portfolio value over 90 days.

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

Nu Holdings  vs.  Chemung Financial Corp

Nu Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Nu Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in February 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Chemung Financial Corp

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Chemung Financial Corp are ranked lower than 2 (%) 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.

Pair Trading with Nu Holdings and Chemung Financial

The main advantage of trading using opposite Nu Holdings and Chemung Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nu Holdings 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 Nu Holdings 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .