Correlation Between Shore Bancshares and Community Trust
Can any of the company-specific risk be diversified away by investing in both Shore Bancshares and Community Trust 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 Community Trust into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Shore Bancshares and Community Trust Bancorp, you can compare the effects of market volatilities on Shore Bancshares and Community Trust 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 Community Trust. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shore Bancshares and Community Trust.
Diversification Opportunities for Shore Bancshares and Community Trust
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Shore and Community is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Shore Bancshares and Community Trust Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Community Trust Bancorp 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 Community Trust. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Community Trust Bancorp has no effect on the direction of Shore Bancshares i.e., Shore Bancshares and Community Trust go up and down completely randomly.
Pair Corralation between Shore Bancshares and Community Trust
Given the investment horizon of 90 days Shore Bancshares is expected to generate 0.99 times more return on investment than Community Trust. However, Shore Bancshares is 1.01 times less risky than Community Trust. It trades about 0.15 of its potential returns per unit of risk. Community Trust Bancorp is currently generating about 0.1 per unit of risk. If you would invest 1,562 in Shore Bancshares on November 3, 2024 and sell it today you would earn a total of 73.00 from holding Shore Bancshares or generate 4.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 95.24% |
| Values | Daily Returns |
Shore Bancshares vs. Community Trust Bancorp
Performance |
| Timeline |
| Shore Bancshares |
| Community Trust Bancorp |
Shore Bancshares and Community Trust Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Shore Bancshares and Community Trust
The main advantage of trading using opposite Shore Bancshares and Community Trust positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shore Bancshares position performs unexpectedly, Community Trust 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 Community Trust will offset losses from the drop in Community Trust's long position.| Shore Bancshares vs. Home Federal Bancorp | Shore Bancshares vs. IF Bancorp | Shore Bancshares vs. Western New England | Shore Bancshares vs. Colony Bankcorp |
| Community Trust vs. Home Bancorp | Community Trust vs. Heritage Financial | Community Trust vs. First Northwest Bancorp | Community Trust vs. HomeTrust 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 the Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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