Correlation Between US Bancorp and Shore Bancshares

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

Diversification Opportunities for US Bancorp and Shore Bancshares

0.69
  Correlation Coefficient

Poor diversification

The 3 months correlation between US Bancorp and Shore is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding US Bancorp and Shore Bancshares in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shore Bancshares and US Bancorp 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 US Bancorp are associated (or correlated) with Shore Bancshares. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shore Bancshares has no effect on the direction of US Bancorp i.e., US Bancorp and Shore Bancshares go up and down completely randomly.

Pair Corralation between US Bancorp and Shore Bancshares

Considering the 90-day investment horizon US Bancorp is expected to under-perform the Shore Bancshares. In addition to that, US Bancorp is 1.27 times more volatile than Shore Bancshares. It trades about -0.15 of its total potential returns per unit of risk. Shore Bancshares is currently generating about -0.17 per unit of volatility. If you would invest  2,073  in Shore Bancshares on March 26, 2022 and sell it today you would lose (282.00)  from holding Shore Bancshares or give up 13.6% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

US Bancorp  vs.  Shore Bancshares

 Performance (%) 
      Timeline 
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 
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 uncertain 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

US Bancorp and Shore Bancshares Volatility Contrast

 Predicted Return Density 
      Returns 

Pair Trading with US Bancorp and Shore Bancshares

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

Shore Bancshares

Pair trading matchups for Shore Bancshares

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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.

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