Correlation Between Bankwell Financial and Shore Bancshares
Can any of the company-specific risk be diversified away by investing in both Bankwell Financial 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 Bankwell Financial and Shore Bancshares into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bankwell Financial Group and Shore Bancshares, you can compare the effects of market volatilities on Bankwell Financial 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 Bankwell Financial with a short position of Shore Bancshares. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bankwell Financial and Shore Bancshares.
Diversification Opportunities for Bankwell Financial and Shore Bancshares
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Bankwell and Shore is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Bankwell Financial Group and Shore Bancshares in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shore Bancshares and Bankwell Financial 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 Bankwell Financial Group 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 Bankwell Financial i.e., Bankwell Financial and Shore Bancshares go up and down completely randomly.
Pair Corralation between Bankwell Financial and Shore Bancshares
Given the investment horizon of 90 days Bankwell Financial Group is expected to generate 0.94 times more return on investment than Shore Bancshares. However, Bankwell Financial Group is 1.07 times less risky than Shore Bancshares. It trades about 0.03 of its potential returns per unit of risk. Shore Bancshares is currently generating about 0.0 per unit of risk. If you would invest 2,757 in Bankwell Financial Group on August 24, 2024 and sell it today you would earn a total of 563.00 from holding Bankwell Financial Group or generate 20.42% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bankwell Financial Group vs. Shore Bancshares
Performance |
| Timeline |
| Bankwell Financial |
| Shore Bancshares |
Bankwell Financial and Shore Bancshares Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bankwell Financial and Shore Bancshares
The main advantage of trading using opposite Bankwell Financial and Shore Bancshares positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bankwell Financial 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.| Bankwell Financial vs. Franklin Financial Services | Bankwell Financial vs. The First Bancshares, | Bankwell Financial vs. Home Federal Bancorp | Bankwell Financial vs. Lake Shore Bancorp |
| Shore Bancshares vs. Home Federal Bancorp | Shore Bancshares vs. IF Bancorp | Shore Bancshares vs. Western New England | Shore Bancshares vs. Colony Bankcorp |
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 the Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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