Correlation Between Peoples Bancorp and Shore Bancshares

Can any of the company-specific risk be diversified away by investing in both Peoples 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 Peoples 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 Peoples Bancorp and Shore Bancshares, you can compare the effects of market volatilities on Peoples 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 Peoples Bancorp with a short position of Shore Bancshares. Check out your portfolio center. Please also check ongoing floating volatility patterns of Peoples Bancorp and Shore Bancshares.

Diversification Opportunities for Peoples Bancorp and Shore Bancshares

0.98

Correlation Coefficient

Peoples Bancorp  Shore Bancshares

Almost no diversification

The 3 months correlation between Peoples and Shore is 0.98. Overlapping area represents the amount of risk that can be diversified away by holding Peoples Bancorp and Shore Bancshares in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shore Bancshares and Peoples 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 Peoples 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 Peoples Bancorp i.e., Peoples Bancorp and Shore Bancshares go up and down completely randomly.

Pair Corralation between Peoples Bancorp and Shore Bancshares

Given the investment horizon of 90 days Peoples Bancorp is expected to generate 1.27 times less return on investment than Shore Bancshares. In addition to that, Peoples Bancorp is 1.21 times more volatile than Shore Bancshares. It trades about 0.09 of its total potential returns per unit of risk. Shore Bancshares is currently generating about 0.13 per unit of volatility. If you would invest  1,395  in Shore Bancshares on August 31, 2024 and sell it today you would earn a total of  250.50  from holding Shore Bancshares or generate 17.96% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	100.0%
Values	Daily Returns

Peoples Bancorp  vs.  Shore Bancshares

Peoples Bancorp

Risk-Adjusted Performance

6 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Peoples Bancorp are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating fundamental drivers, Peoples Bancorp displayed solid returns over the last few months and may actually be approaching a breakup point.

Shore Bancshares

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Shore Bancshares are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite fairly weak fundamental drivers, Shore Bancshares demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Peoples Bancorp and Shore Bancshares

The main advantage of trading using opposite Peoples Bancorp and Shore Bancshares positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Peoples 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.

The idea behind Peoples Bancorp and Shore Bancshares pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..