Correlation Between Block and ATIF Holdings

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

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

Diversification Opportunities for Block and ATIF Holdings

-0.74

Correlation Coefficient

Block  ATIF Holdings

Pay attention - limited upside

The 3 months correlation between Block and ATIF is -0.74. Overlapping area represents the amount of risk that can be diversified away by holding Block Inc and ATIF Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ATIF Holdings 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 ATIF Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ATIF Holdings has no effect on the direction of Block i.e., Block and ATIF Holdings go up and down completely randomly.

Pair Corralation between Block and ATIF Holdings

Allowing for the 90-day total investment horizon Block Inc is expected to generate 0.27 times more return on investment than ATIF Holdings. However, Block Inc is 3.71 times less risky than ATIF Holdings. It trades about 0.22 of its potential returns per unit of risk. ATIF Holdings is currently generating about 0.01 per unit of risk. If you would invest  6,458  in Block Inc on September 5, 2024 and sell it today you would earn a total of  2,862  from holding Block Inc or generate 44.32% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	98.44%
Values	Daily Returns

Block Inc  vs.  ATIF Holdings

Block Inc

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Block Inc are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. Even with relatively unfluctuating basic indicators, Block reported solid returns over the last few months and may actually be approaching a breakup point.

ATIF Holdings

Risk-Adjusted Performance

0 of 100

Weak

Over the last 90 days ATIF Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable forward indicators, ATIF Holdings is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Block and ATIF Holdings

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

The idea behind Block Inc and ATIF Holdings 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.