Correlation Between Shore Bancshares and BRASIL ON

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

Diversification Opportunities for Shore Bancshares and BRASIL ON

-0.16
  Correlation Coefficient

Good diversification

The 3 months correlation between Shore and BRASIL is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding Shore Bancshares and BRASIL ON NM in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BRASIL ON NM and Shore Bancshares 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 Shore Bancshares are associated (or correlated) with BRASIL ON. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BRASIL ON NM has no effect on the direction of Shore Bancshares i.e., Shore Bancshares and BRASIL ON go up and down completely randomly.

Pair Corralation between Shore Bancshares and BRASIL ON

Given the investment horizon of 90 days Shore Bancshares is expected to under-perform the BRASIL ON. But the stock apears to be less risky and, when comparing its historical volatility, Shore Bancshares is 1.84 times less risky than BRASIL ON. The stock trades about -0.36 of its potential returns per unit of risk. The BRASIL ON NM is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  3,516  in BRASIL ON NM on February 19, 2022 and sell it today you would earn a total of  54.00  from holding BRASIL ON NM or generate 1.54% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy91.3%
ValuesDaily Returns

Shore Bancshares  vs.  BRASIL ON NM

 Performance (%) 
      Timeline 
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 latest weak performance, the Stock's fundamental drivers remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Shore Price Channel

BRASIL ON NM 
BRASIL Performance
3 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in BRASIL ON NM are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable basic indicators, BRASIL ON is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

BRASIL Price Channel

Shore Bancshares and BRASIL ON Volatility Contrast

 Predicted Return Density 
      Returns 

Pair Trading with Shore Bancshares and BRASIL ON

The main advantage of trading using opposite Shore Bancshares and BRASIL ON positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shore Bancshares position performs unexpectedly, BRASIL ON 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 BRASIL ON will offset losses from the drop in BRASIL ON's long position.
The idea behind Shore Bancshares and BRASIL ON NM 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.

BRASIL ON NM

Pair trading matchups for BRASIL ON

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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.

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