Correlation Between Shore Bancshares and Virginia National
Can any of the company-specific risk be diversified away by investing in both Shore Bancshares and Virginia National 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 Virginia National into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Shore Bancshares and Virginia National Bankshares, you can compare the effects of market volatilities on Shore Bancshares and Virginia National 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 Virginia National. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shore Bancshares and Virginia National.
Diversification Opportunities for Shore Bancshares and Virginia National
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Shore and Virginia is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Shore Bancshares and Virginia National Bankshares in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Virginia National 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 Virginia National. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Virginia National has no effect on the direction of Shore Bancshares i.e., Shore Bancshares and Virginia National go up and down completely randomly.
Pair Corralation between Shore Bancshares and Virginia National
Given the investment horizon of 90 days Shore Bancshares is expected to generate 1.63 times more return on investment than Virginia National. However, Shore Bancshares is 1.63 times more volatile than Virginia National Bankshares. It trades about 0.22 of its potential returns per unit of risk. Virginia National Bankshares is currently generating about 0.08 per unit of risk. 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 |
Shore Bancshares vs. Virginia National Bankshares
Performance |
| Timeline |
| Shore Bancshares |
| Virginia National |
Shore Bancshares and Virginia National Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Shore Bancshares and Virginia National
The main advantage of trading using opposite Shore Bancshares and Virginia National positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shore Bancshares position performs unexpectedly, Virginia National 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 Virginia National will offset losses from the drop in Virginia National'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 |
| Virginia National vs. Finward Bancorp | Virginia National vs. Community West Bancshares | Virginia National vs. First Financial Northwest | Virginia National vs. Oak Valley Bancorp |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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