Correlation Between GP Investments and Block

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

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

Diversification Opportunities for GP Investments and Block

-0.31

Correlation Coefficient

GP Investments  Block

Very good diversification

The 3 months correlation between GPIV33 and Block is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding GP Investments and Block Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Block Inc and GP Investments 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 GP Investments 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 GP Investments i.e., GP Investments and Block go up and down completely randomly.

Pair Corralation between GP Investments and Block

Assuming the 90 days trading horizon GP Investments is expected to generate 1.19 times more return on investment than Block. However, GP Investments is 1.19 times more volatile than Block Inc. It trades about 0.12 of its potential returns per unit of risk. Block Inc is currently generating about -0.01 per unit of risk. If you would invest  377.00  in GP Investments on October 8, 2024 and sell it today you would earn a total of  27.00  from holding GP Investments or generate 7.16% return on investment over 90 days.

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

GP Investments  vs.  Block Inc

GP Investments

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in GP Investments are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong forward indicators, GP Investments is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Block Inc

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Block Inc are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Block sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with GP Investments and Block

The main advantage of trading using opposite GP Investments and Block positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GP Investments 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 GP Investments 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.