Correlation Between M3 Mining and Block

Can any of the company-specific risk be diversified away by investing in both M3 Mining 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 M3 Mining and Block into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between M3 Mining and Block Inc, you can compare the effects of market volatilities on M3 Mining 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 M3 Mining with a short position of Block. Check out your portfolio center. Please also check ongoing floating volatility patterns of M3 Mining and Block.

Diversification Opportunities for M3 Mining and Block

-0.83

Correlation Coefficient

M3 Mining  Block

Pay attention - limited upside

The 3 months correlation between M3M and Block is -0.83. Overlapping area represents the amount of risk that can be diversified away by holding M3 Mining and Block Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Block Inc and M3 Mining 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 M3 Mining 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 M3 Mining i.e., M3 Mining and Block go up and down completely randomly.

Pair Corralation between M3 Mining and Block

Assuming the 90 days trading horizon M3 Mining is expected to under-perform the Block. In addition to that, M3 Mining is 1.43 times more volatile than Block Inc. It trades about -0.08 of its total potential returns per unit of risk. Block Inc is currently generating about 0.15 per unit of volatility. If you would invest  9,474  in Block Inc on September 19, 2024 and sell it today you would earn a total of  5,406  from holding Block Inc or generate 57.06% return on investment over 90 days.

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

M3 Mining  vs.  Block Inc

M3 Mining

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days M3 Mining has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's primary indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Block Inc

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Block Inc are ranked lower than 18 (%) 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 M3 Mining and Block

The main advantage of trading using opposite M3 Mining and Block positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if M3 Mining 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 M3 Mining 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.