Correlation Between Global Blue and Block

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

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

Diversification Opportunities for Global Blue and Block

0.61

Correlation Coefficient

Global Blue  Block

Poor diversification

The 3 months correlation between Global and Block is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Global Blue Group and Block Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Block Inc and Global Blue 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 Global Blue Group 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 Global Blue i.e., Global Blue and Block go up and down completely randomly.

Pair Corralation between Global Blue and Block

Allowing for the 90-day total investment horizon Global Blue Group is expected to generate 0.76 times more return on investment than Block. However, Global Blue Group is 1.31 times less risky than Block. It trades about 0.54 of its potential returns per unit of risk. Block Inc is currently generating about -0.04 per unit of risk. If you would invest  602.00  in Global Blue Group on October 8, 2024 and sell it today you would earn a total of  163.00  from holding Global Blue Group or generate 27.08% return on investment over 90 days.

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

Global Blue Group  vs.  Block Inc

Global Blue Group

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Global Blue Group are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unsteady fundamental drivers, Global Blue sustained solid returns over the last few months and may actually be approaching a breakup point.

Block Inc

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Block Inc are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Even with relatively abnormal basic indicators, Block reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Global Blue and Block

The main advantage of trading using opposite Global Blue and Block positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Global Blue 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 Global Blue Group 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.

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 Stocks Directory module to find actively traded stocks across global markets.