Correlation Between Comerica and Chemung Financial

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

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

Diversification Opportunities for Comerica and Chemung Financial

0.93

Correlation Coefficient

Comerica  Chemung Financial

Almost no diversification

The 3 months correlation between Comerica and Chemung is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Comerica 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 Comerica 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 Comerica 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 Comerica i.e., Comerica and Chemung Financial go up and down completely randomly.

Pair Corralation between Comerica and Chemung Financial

Considering the 90-day investment horizon Comerica is expected to generate 1.44 times more return on investment than Chemung Financial. However, Comerica is 1.44 times more volatile than Chemung Financial Corp. It trades about 0.2 of its potential returns per unit of risk. Chemung Financial Corp is currently generating about 0.21 per unit of risk. If you would invest  6,447  in Comerica on August 31, 2024 and sell it today you would earn a total of  785.00  from holding Comerica or generate 12.18% return on investment over 90 days.

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

Comerica  vs.  Chemung Financial Corp

Comerica

Risk-Adjusted Performance

16 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Comerica are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite somewhat conflicting primary indicators, Comerica sustained solid returns over the last few months and may actually be approaching a breakup point.

Chemung Financial Corp

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Chemung Financial Corp are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak primary indicators, Chemung Financial may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Pair Trading with Comerica and Chemung Financial

The main advantage of trading using opposite Comerica and Chemung Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Comerica 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 Comerica 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.