Correlation Between British Amer and Block

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

By analyzing existing cross correlation between Bailador Technology Invest and Block Inc, you can compare the effects of market volatilities on British Amer and Block 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 British Amer with a short position of Block. Check out your portfolio center. Please also check ongoing floating volatility patterns of British Amer and Block.

Diversification Opportunities for British Amer and Block

-0.31

Correlation Coefficient

British Amer  Block

Very good diversification

The 3 months correlation between British and Block is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Bailador Technology Invest and Block Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Block Inc and British Amer 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 Bailador Technology Invest are associated (or correlated) with Block. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Block Inc has no effect on the direction of British Amer i.e., British Amer and Block go up and down completely randomly.

Pair Corralation between British Amer and Block

Assuming the 90 days trading horizon British Amer is expected to generate 5.03 times less return on investment than Block. But when comparing it to its historical volatility, Bailador Technology Invest is 2.57 times less risky than Block. It trades about 0.02 of its potential returns per unit of risk. Block Inc is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  10,230  in Block Inc on October 11, 2024 and sell it today you would earn a total of  4,050  from holding Block Inc or generate 39.59% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Bailador Technology Invest  vs.  Block Inc

Bailador Technology

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Bailador Technology Invest has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable forward indicators, British Amer is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Block Inc

Risk-Adjusted Performance

14 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Block Inc are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Block unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with British Amer and Block

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

The idea behind Bailador Technology Invest and Block Inc 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.