Correlation Between Oracle and Shore Bancshares

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Can any of the company-specific risk be diversified away by investing in both Oracle and Shore Bancshares 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 Oracle and Shore Bancshares into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Oracle Corp and Shore Bancshares, you can compare the effects of market volatilities on Oracle and Shore Bancshares 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 Oracle with a short position of Shore Bancshares. Check out your portfolio center. Please also check ongoing floating volatility patterns of Oracle and Shore Bancshares.

Diversification Opportunities for Oracle and Shore Bancshares

0.85
  Correlation Coefficient

Very poor diversification

The 3 months correlation between Oracle and Shore is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Oracle Corp and Shore Bancshares in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shore Bancshares and Oracle 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 Oracle Corp are associated (or correlated) with Shore Bancshares. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shore Bancshares has no effect on the direction of Oracle i.e., Oracle and Shore Bancshares go up and down completely randomly.

Pair Corralation between Oracle and Shore Bancshares

Given the investment horizon of 90 days Oracle is expected to generate 4.19 times less return on investment than Shore Bancshares. But when comparing it to its historical volatility, Oracle Corp is 1.02 times less risky than Shore Bancshares. It trades about 0.01 of its potential returns per unit of risk. Shore Bancshares is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  1,161  in Shore Bancshares on June 30, 2022 and sell it today you would earn a total of  623.00  from holding Shore Bancshares or generate 53.66% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthStrong
Accuracy100.0%
ValuesDaily Returns

Oracle Corp  vs.  Shore Bancshares

 Performance (%) 
       Timeline  
Oracle Corp 
Oracle Performance
0 of 100
Over the last 90 days Oracle Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest weak performance, the Stock's fundamental indicators remain steady and the new chaos on Wall Street may also be a sign of medium-term gains for the company stakeholders.

Oracle Price Channel

Shore Bancshares 
Shore Performance
0 of 100
Over the last 90 days Shore Bancshares has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable fundamental drivers, Shore Bancshares is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Shore Price Channel

Oracle and Shore Bancshares Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Oracle and Shore Bancshares

The main advantage of trading using opposite Oracle and Shore Bancshares positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Oracle position performs unexpectedly, Shore Bancshares 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 Shore Bancshares will offset losses from the drop in Shore Bancshares' long position.
Oracle vs. Kibush Capital Corp
The idea behind Oracle Corp and Shore Bancshares 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.
Shore Bancshares vs. Kibush Capital Corp
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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.

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