Correlation Between Block and Global Blue

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

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

Diversification Opportunities for Block and Global Blue

0.61

Correlation Coefficient

Block  Global Blue

Poor diversification

The 3 months correlation between Block and Global is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Block Inc and Global Blue Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global Blue Group 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 Global Blue. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global Blue Group has no effect on the direction of Block i.e., Block and Global Blue go up and down completely randomly.

Pair Corralation between Block and Global Blue

Allowing for the 90-day total investment horizon Block Inc is expected to under-perform the Global Blue. In addition to that, Block is 1.31 times more volatile than Global Blue Group. It trades about -0.04 of its total potential returns per unit of risk. Global Blue Group is currently generating about 0.54 per unit of volatility. If you would invest  602.00  in Global Blue Group on October 8, 2024 and sell it today you would earn a total of  163.00  from holding Global Blue Group or generate 27.08% return on investment over 90 days.

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

Block Inc  vs.  Global Blue Group

Block Inc

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Block Inc are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Even with relatively abnormal basic indicators, Block reported solid returns over the last few months and may actually be approaching a breakup point.

Global Blue Group

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Global Blue Group are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unsteady fundamental drivers, Global Blue sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Block and Global Blue

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

The idea behind Block Inc and Global Blue Group 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.