Correlation Between FVCBankcorp and Shore Bancshares
Can any of the company-specific risk be diversified away by investing in both FVCBankcorp 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 FVCBankcorp and Shore Bancshares into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between FVCBankcorp and Shore Bancshares, you can compare the effects of market volatilities on FVCBankcorp 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 FVCBankcorp with a short position of Shore Bancshares. Check out your portfolio center. Please also check ongoing floating volatility patterns of FVCBankcorp and Shore Bancshares.
Diversification Opportunities for FVCBankcorp and Shore Bancshares
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between FVCBankcorp and Shore is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding FVCBankcorp and Shore Bancshares in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shore Bancshares and FVCBankcorp 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 FVCBankcorp 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 FVCBankcorp i.e., FVCBankcorp and Shore Bancshares go up and down completely randomly.
Pair Corralation between FVCBankcorp and Shore Bancshares
Given the investment horizon of 90 days FVCBankcorp is expected to generate 1.33 times less return on investment than Shore Bancshares. But when comparing it to its historical volatility, FVCBankcorp is 1.18 times less risky than Shore Bancshares. It trades about 0.2 of its potential returns per unit of risk. Shore Bancshares is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest 1,443 in Shore Bancshares on September 1, 2024 and sell it today you would earn a total of 202.00 from holding Shore Bancshares or generate 14.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
FVCBankcorp vs. Shore Bancshares
Performance |
| Timeline |
| FVCBankcorp |
| Shore Bancshares |
FVCBankcorp and Shore Bancshares Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with FVCBankcorp and Shore Bancshares
The main advantage of trading using opposite FVCBankcorp and Shore Bancshares positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FVCBankcorp 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.| FVCBankcorp vs. Affinity Bancshares | FVCBankcorp vs. Southern California Bancorp | FVCBankcorp vs. Auburn National Bancorporation | FVCBankcorp vs. BayCom Corp |
| 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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