Correlation Between Shore Bancshares and US Bancorp

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

Diversification Opportunities for Shore Bancshares and US Bancorp

0.7
  Correlation Coefficient

Poor diversification

The 3 months correlation between Shore and US Bancorp is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Shore Bancshares and US Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on US Bancorp 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 US Bancorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of US Bancorp has no effect on the direction of Shore Bancshares i.e., Shore Bancshares and US Bancorp go up and down completely randomly.

Pair Corralation between Shore Bancshares and US Bancorp

Given the investment horizon of 90 days Shore Bancshares is expected to generate 0.69 times more return on investment than US Bancorp. However, Shore Bancshares is 1.45 times less risky than US Bancorp. It trades about 0.06 of its potential returns per unit of risk. US Bancorp is currently generating about -0.03 per unit of risk. If you would invest  1,610  in Shore Bancshares on April 1, 2022 and sell it today you would earn a total of  257.00  from holding Shore Bancshares or generate 15.96% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

Shore Bancshares  vs.  US Bancorp

 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.

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

US Bancorp 
US Bancorp Performance
0 of 100
Over the last 90 days US Bancorp 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 basic indicators remain somewhat strong which may send shares a bit higher in July 2022. The current disturbance may also be a sign of long term up-swing for the company investors.

Structure and Payout Changes

Forward Annual Dividend Yield
0.0397
Payout Ratio
0.4
Last Split Factor
3:1
Forward Annual Dividend Rate
1.84
Dividend Date
2022-07-15
Ex Dividend Date
2022-06-29
Last Split Date
1999-04-16

US Bancorp Price Channel

Shore Bancshares and US Bancorp Volatility Contrast

 Predicted Return Density 
      Returns 

Pair Trading with Shore Bancshares and US Bancorp

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

Shore Bancshares

Pair trading matchups for Shore Bancshares

The idea behind Shore Bancshares and US Bancorp 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.

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