Correlation Between Performant Financial and Block
Can any of the company-specific risk be diversified away by investing in both Performant Financial 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 Performant Financial and Block into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Performant Financial and Block Inc, you can compare the effects of market volatilities on Performant Financial 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 Performant Financial with a short position of Block. Check out your portfolio center. Please also check ongoing floating volatility patterns of Performant Financial and Block.
Diversification Opportunities for Performant Financial and Block
-0.65 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Performant and Block is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding Performant Financial and Block Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Block Inc and Performant Financial 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 Performant Financial 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 Performant Financial i.e., Performant Financial and Block go up and down completely randomly.
Pair Corralation between Performant Financial and Block
Given the investment horizon of 90 days Performant Financial is expected to under-perform the Block. In addition to that, Performant Financial is 1.23 times more volatile than Block Inc. It trades about -0.19 of its total potential returns per unit of risk. Block Inc is currently generating about 0.27 per unit of volatility. If you would invest 7,232 in Block Inc on September 1, 2024 and sell it today you would earn a total of 1,623 from holding Block Inc or generate 22.44% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Performant Financial vs. Block Inc
Performance |
Timeline |
Performant Financial |
Block Inc |
Performant Financial and Block Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Performant Financial and Block
The main advantage of trading using opposite Performant Financial and Block positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Performant Financial 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.Performant Financial vs. Network 1 Technologies | Performant Financial vs. Rentokil Initial PLC | Performant Financial vs. Wilhelmina | Performant Financial vs. Mader Group Limited |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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