Correlation Between Block and So Carlos

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

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

Diversification Opportunities for Block and So Carlos

-0.26

Correlation Coefficient

Block  So Carlos

Very good diversification

The 3 months correlation between Block and SCAR3 is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding Block Inc and So Carlos Empreendimentos in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on So Carlos Empreendimentos and 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 Block Inc are associated (or correlated) with So Carlos. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of So Carlos Empreendimentos has no effect on the direction of Block i.e., Block and So Carlos go up and down completely randomly.

Pair Corralation between Block and So Carlos

Assuming the 90 days trading horizon Block Inc is expected to under-perform the So Carlos. In addition to that, Block is 1.61 times more volatile than So Carlos Empreendimentos. It trades about -0.17 of its total potential returns per unit of risk. So Carlos Empreendimentos is currently generating about -0.07 per unit of volatility. If you would invest  2,110  in So Carlos Empreendimentos on December 30, 2024 and sell it today you would lose (270.00) from holding So Carlos Empreendimentos or give up 12.8% of portfolio value over 90 days.

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

Block Inc  vs.  So Carlos Empreendimentos

Block Inc

Risk-Adjusted Performance

Very Weak

Over the last 90 days Block Inc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

So Carlos Empreendimentos

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Block and So Carlos

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

The idea behind Block Inc and So Carlos Empreendimentos 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.