Correlation Between Rhinebeck Bancorp and Shore Bancshares
Can any of the company-specific risk be diversified away by investing in both Rhinebeck 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 Rhinebeck 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 Rhinebeck Bancorp and Shore Bancshares, you can compare the effects of market volatilities on Rhinebeck 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 Rhinebeck Bancorp with a short position of Shore Bancshares. Check out your portfolio center. Please also check ongoing floating volatility patterns of Rhinebeck Bancorp and Shore Bancshares.
Diversification Opportunities for Rhinebeck Bancorp and Shore Bancshares
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Rhinebeck and Shore is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Rhinebeck Bancorp and Shore Bancshares in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shore Bancshares and Rhinebeck 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 Rhinebeck 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 Rhinebeck Bancorp i.e., Rhinebeck Bancorp and Shore Bancshares go up and down completely randomly.
Pair Corralation between Rhinebeck Bancorp and Shore Bancshares
Given the investment horizon of 90 days Rhinebeck Bancorp is expected to generate 1.14 times less return on investment than Shore Bancshares. But when comparing it to its historical volatility, Rhinebeck Bancorp is 2.85 times less risky than Shore Bancshares. It trades about 0.19 of its potential returns per unit of risk. Shore Bancshares is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 1,450 in Shore Bancshares on October 29, 2024 and sell it today you would earn a total of 139.00 from holding Shore Bancshares or generate 9.59% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Rhinebeck Bancorp vs. Shore Bancshares
Performance |
| Timeline |
| Rhinebeck Bancorp |
| Shore Bancshares |
Rhinebeck Bancorp and Shore Bancshares Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Rhinebeck Bancorp and Shore Bancshares
The main advantage of trading using opposite Rhinebeck Bancorp and Shore Bancshares positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Rhinebeck 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.| Rhinebeck Bancorp vs. Home Federal Bancorp | Rhinebeck Bancorp vs. Community West Bancshares | Rhinebeck Bancorp vs. Magyar Bancorp | Rhinebeck Bancorp vs. First Financial Northwest |
| 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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