Correlation Between HR Block and BTC Digital

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

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

Diversification Opportunities for HR Block and BTC Digital

-0.31

Correlation Coefficient

HR Block  BTC Digital

Very good diversification

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

Pair Corralation between HR Block and BTC Digital

Considering the 90-day investment horizon HR Block is expected to under-perform the BTC Digital. But the stock apears to be less risky and, when comparing its historical volatility, HR Block is 17.4 times less risky than BTC Digital. The stock trades about -0.25 of its potential returns per unit of risk. The BTC Digital is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  5.21  in BTC Digital on October 8, 2024 and sell it today you would lose (0.86) from holding BTC Digital or give up 16.51% of portfolio value over 90 days.

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

HR Block  vs.  BTC Digital

HR Block

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days HR Block has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unfluctuating performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

BTC Digital

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in BTC Digital are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of fairly uncertain basic indicators, BTC Digital showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with HR Block and BTC Digital

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

The idea behind HR Block and BTC Digital 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.