Correlation Between Shore Bancshares and Walmart

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

Diversification Opportunities for Shore Bancshares and Walmart

0.05
  Correlation Coefficient

Significant diversification

The 3 months correlation between Shore and Walmart is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Shore Bancshares and Walmart in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Walmart 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 Walmart. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Walmart has no effect on the direction of Shore Bancshares i.e., Shore Bancshares and Walmart go up and down completely randomly.

Pair Corralation between Shore Bancshares and Walmart

Given the investment horizon of 90 days Shore Bancshares is expected to generate 0.43 times more return on investment than Walmart. However, Shore Bancshares is 2.33 times less risky than Walmart. It trades about 0.43 of its potential returns per unit of risk. Walmart is currently generating about 0.08 per unit of risk. If you would invest  1,854  in Shore Bancshares on May 18, 2022 and sell it today you would earn a total of  173.00  from holding Shore Bancshares or generate 9.33% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Shore Bancshares  vs.  Walmart

 Performance (%) 
       Timeline  
Shore Bancshares 
Shore Performance
4 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Shore Bancshares are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable fundamental drivers, Shore Bancshares is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Shore Price Channel

Walmart 
Walmart Performance
6 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Walmart are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively sluggish primary indicators, Walmart may actually be approaching a critical reversion point that can send shares even higher in September 2022.

Walmart Price Channel

Shore Bancshares and Walmart Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Shore Bancshares and Walmart

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

Shore Bancshares

Pair trading matchups for Shore Bancshares

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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 Walmart 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.

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