Correlation Between Shore Bancshares and BRADESCO

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

Diversification Opportunities for Shore Bancshares and BRADESCO

0.29
  Correlation Coefficient

Modest diversification

The 3 months correlation between Shore and BRADESCO is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Shore Bancshares and BRADESCO PN EJ N1 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BRADESCO PN EJ 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 BRADESCO. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BRADESCO PN EJ has no effect on the direction of Shore Bancshares i.e., Shore Bancshares and BRADESCO go up and down completely randomly.

Pair Corralation between Shore Bancshares and BRADESCO

Given the investment horizon of 90 days Shore Bancshares is expected to generate 1.01 times more return on investment than BRADESCO. However, Shore Bancshares is 1.01 times more volatile than BRADESCO PN EJ. It trades about 0.07 of its potential returns per unit of risk. BRADESCO PN EJ is currently generating about 0.02 per unit of risk. If you would invest  993.00  in Shore Bancshares on March 28, 2022 and sell it today you would earn a total of  798.00  from holding Shore Bancshares or generate 80.36% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy98.4%
ValuesDaily Returns

Shore Bancshares  vs.  BRADESCO PN EJ N1

 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 weak performance in the last few months, the Stock's fundamental drivers remain nearly stable which may send shares a bit higher in July 2022. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Structure and Payout Changes

Forward Annual Dividend Yield
0.0246
Payout Ratio
0.31
Last Split Factor
3:2
Forward Annual Dividend Rate
0.48
Dividend Date
2022-05-31
Ex Dividend Date
2022-05-12
Last Split Date
2006-06-06

Shore Price Channel

BRADESCO PN EJ 
BRADESCO Performance
0 of 100
Over the last 90 days BRADESCO PN EJ has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest weak performance, the Stock's basic indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

BRADESCO Price Channel

Shore Bancshares and BRADESCO Volatility Contrast

 Predicted Return Density 
      Returns 

Pair Trading with Shore Bancshares and BRADESCO

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

Shore Bancshares

Pair trading matchups for Shore Bancshares

Northrop Grumman vs. Shore Bancshares
Conagra Brands vs. Shore Bancshares
Verizon Communications vs. Shore Bancshares
Cincinnati Financial vs. Shore Bancshares
Macroaxis vs. Shore Bancshares
Home Depot vs. Shore Bancshares
Chevron Corp vs. Shore Bancshares
Teucrium Corn vs. Shore Bancshares
The effect of pair diversification on risk is to reduce it, but we should note this doesn't apply to all risk types. When we trade pairs against Shore Bancshares as a counterpart, there is always some inherent risk that will never be diversified away no matter what. This volatility limits the effect of tactical diversification using pair trading. Shore Bancshares' systematic risk is the inherent uncertainty of the entire market, and therefore cannot be mitigated even by pair-trading it against the equity that is not highly correlated to it. On the other hand, Shore Bancshares' unsystematic risk describes the types of risk that we can protect against, at least to some degree, by selecting a matching pair that is not perfectly correlated to Shore Bancshares.
The idea behind Shore Bancshares and BRADESCO PN EJ 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.

BRADESCO PN EJ

Pair trading matchups for BRADESCO

Northrop Grumman vs. BRADESCO
Merck vs. BRADESCO
Chevron Corp vs. BRADESCO
Cincinnati Financial vs. BRADESCO
Teucrium Corn vs. BRADESCO
Conagra Brands vs. BRADESCO
Micron Technology vs. BRADESCO
Macroaxis vs. BRADESCO
The effect of pair diversification on risk is to reduce it, but we should note this doesn't apply to all risk types. When we trade pairs against BRADESCO as a counterpart, there is always some inherent risk that will never be diversified away no matter what. This volatility limits the effect of tactical diversification using pair trading. BRADESCO's systematic risk is the inherent uncertainty of the entire market, and therefore cannot be mitigated even by pair-trading it against the equity that is not highly correlated to it. On the other hand, BRADESCO's unsystematic risk describes the types of risk that we can protect against, at least to some degree, by selecting a matching pair that is not perfectly correlated to BRADESCO PN EJ.
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..

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