Correlation Between Minbos Resources and Block

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

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

Diversification Opportunities for Minbos Resources and Block

0.75

Correlation Coefficient

Minbos Resources  Block

Poor diversification

The 3 months correlation between Minbos and Block is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Minbos Resources and Block Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Block Inc and Minbos Resources 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 Minbos Resources 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 Minbos Resources i.e., Minbos Resources and Block go up and down completely randomly.

Pair Corralation between Minbos Resources and Block

Assuming the 90 days trading horizon Minbos Resources is expected to under-perform the Block. In addition to that, Minbos Resources is 2.46 times more volatile than Block Inc. It trades about -0.11 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  13,602  in Block Inc on October 1, 2024 and sell it today you would earn a total of  1,061  from holding Block Inc or generate 7.8% return on investment over 90 days.

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

Minbos Resources  vs.  Block Inc

Minbos Resources

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Minbos Resources are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain fundamental drivers, Minbos Resources unveiled solid returns over the last few months and may actually be approaching a breakup point.

Block Inc

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Block Inc are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Block unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Minbos Resources and Block

The main advantage of trading using opposite Minbos Resources and Block positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Minbos Resources 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 Minbos Resources 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.