Correlation Between Block and Remitly Global

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

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

Diversification Opportunities for Block and Remitly Global

0.88

Correlation Coefficient

Block  Remitly Global

Very poor diversification

The 3 months correlation between Block and Remitly is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Block Inc and Remitly Global in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Remitly Global 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 Remitly Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Remitly Global has no effect on the direction of Block i.e., Block and Remitly Global go up and down completely randomly.

Pair Corralation between Block and Remitly Global

Allowing for the 90-day total investment horizon Block is expected to generate 1.33 times less return on investment than Remitly Global. But when comparing it to its historical volatility, Block Inc is 1.06 times less risky than Remitly Global. It trades about 0.2 of its potential returns per unit of risk. Remitly Global is currently generating about 0.25 of returns per unit of risk over similar time horizon. If you would invest  1,344  in Remitly Global on September 3, 2024 and sell it today you would earn a total of  731.00  from holding Remitly Global or generate 54.39% return on investment over 90 days.

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

Block Inc  vs.  Remitly Global

Block Inc

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Block Inc are ranked lower than 15 (%) 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.

Remitly Global

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Remitly Global are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal essential indicators, Remitly Global showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Block and Remitly Global

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

The idea behind Block Inc and Remitly Global 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.