Correlation Between Shore Bancshares and Alphabet

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

Diversification Opportunities for Shore Bancshares and Alphabet

0.81
  Correlation Coefficient

Very poor diversification

The 3 months correlation between Shore and Alphabet is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Shore Bancshares and Alphabet Cl A in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alphabet Cl A 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 Alphabet. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alphabet Cl A has no effect on the direction of Shore Bancshares i.e., Shore Bancshares and Alphabet go up and down completely randomly.

Pair Corralation between Shore Bancshares and Alphabet

Given the investment horizon of 90 days Shore Bancshares is expected to generate 0.51 times more return on investment than Alphabet. However, Shore Bancshares is 1.96 times less risky than Alphabet. It trades about -0.12 of its potential returns per unit of risk. Alphabet Cl A is currently generating about -0.11 per unit of risk. If you would invest  1,845  in Shore Bancshares on July 6, 2022 and sell it today you would lose (55.00)  from holding Shore Bancshares or give up 2.98% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthStrong
Accuracy100.0%
ValuesDaily Returns

Shore Bancshares  vs.  Alphabet Cl A

 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 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

Alphabet Cl A 
Alphabet Performance
0 of 100
Over the last 90 days Alphabet Cl A has generated negative risk-adjusted returns adding no value to investors with long positions. Even with unsteady performance in the last few months, the Stock's technical and fundamental indicators remain relatively steady which may send shares a bit higher in November 2022. The new chaos may also be a sign of medium-term up-swing for the company stakeholders.

Alphabet Price Channel

Shore Bancshares and Alphabet Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Shore Bancshares and Alphabet

The main advantage of trading using opposite Shore Bancshares and Alphabet positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shore Bancshares position performs unexpectedly, Alphabet 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 Alphabet will offset losses from the drop in Alphabet's long position.
Shore Bancshares vs. Amazon Inc
The idea behind Shore Bancshares and Alphabet Cl A 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.
Alphabet vs. Tencent Holdings
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.

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