Correlation Between Community Heritage and Bank of Utica

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

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

Diversification Opportunities for Community Heritage and Bank of Utica

-0.8

Correlation Coefficient

Community Heritage  Bank of Utica

Pay attention - limited upside

The 3 months correlation between Community and Bank is -0.8. Overlapping area represents the amount of risk that can be diversified away by holding Community Heritage Financial and Bank of Utica in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bank of Utica and Community Heritage 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 Community Heritage Financial are associated (or correlated) with Bank of Utica. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bank of Utica has no effect on the direction of Community Heritage i.e., Community Heritage and Bank of Utica go up and down completely randomly.

Pair Corralation between Community Heritage and Bank of Utica

Given the investment horizon of 90 days Community Heritage is expected to generate 1.93 times less return on investment than Bank of Utica. But when comparing it to its historical volatility, Community Heritage Financial is 2.48 times less risky than Bank of Utica. It trades about 0.01 of its potential returns per unit of risk. Bank of Utica is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  54,000  in Bank of Utica on June 22, 2024 and sell it today you would lose (11,400) from holding Bank of Utica or give up 21.11% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	91.97%
Values	Daily Returns

Community Heritage Financial  vs.  Bank of Utica

Community Heritage

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Community Heritage Financial are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile technical indicators, Community Heritage reported solid returns over the last few months and may actually be approaching a breakup point.

Bank of Utica

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Bank of Utica has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in October 2024. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Community Heritage and Bank of Utica

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

The idea behind Community Heritage Financial and Bank of Utica 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.

Check out your portfolio center.

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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.