Correlation Between Shore Bancshares and Home Bancorp

Can any of the company-specific risk be diversified away by investing in both Shore Bancshares and Home Bancorp 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 Home Bancorp into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Shore Bancshares and Home Bancorp, you can compare the effects of market volatilities on Shore Bancshares and Home Bancorp 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 Home Bancorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shore Bancshares and Home Bancorp.

Diversification Opportunities for Shore Bancshares and Home Bancorp

0.94

Correlation Coefficient

Shore Bancshares  Home Bancorp

Almost no diversification

The 3 months correlation between Shore and Home is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Shore Bancshares and Home Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Home 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 Home Bancorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Home Bancorp has no effect on the direction of Shore Bancshares i.e., Shore Bancshares and Home Bancorp go up and down completely randomly.

Pair Corralation between Shore Bancshares and Home Bancorp

Given the investment horizon of 90 days Shore Bancshares is expected to generate 1.13 times more return on investment than Home Bancorp. However, Shore Bancshares is 1.13 times more volatile than Home Bancorp. It trades about 0.06 of its potential returns per unit of risk. Home Bancorp is currently generating about 0.03 per unit of risk. If you would invest  1,443  in Shore Bancshares on May 5, 2025 and sell it today you would earn a total of  81.00  from holding Shore Bancshares or generate 5.61% return on investment over 90 days.

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

Shore Bancshares  vs.  Home Bancorp

Shore Bancshares

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Shore Bancshares are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite fairly conflicting fundamental drivers, Shore Bancshares may actually be approaching a critical reversion point that can send shares even higher in September 2025.

Home Bancorp

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Home Bancorp are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable fundamental indicators, Home Bancorp is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Shore Bancshares and Home Bancorp

The main advantage of trading using opposite Shore Bancshares and Home Bancorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shore Bancshares position performs unexpectedly, Home Bancorp 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 Home Bancorp will offset losses from the drop in Home Bancorp's long position.

The idea behind Shore Bancshares and Home Bancorp 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.