Correlation Between Block and AMP

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

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

Diversification Opportunities for Block and AMP

0.62

Correlation Coefficient

Block  AMP

Poor diversification

The 3 months correlation between Block and AMP is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Block Inc and AMP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AMP 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 AMP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AMP has no effect on the direction of Block i.e., Block and AMP go up and down completely randomly.

Pair Corralation between Block and AMP

Assuming the 90 days trading horizon Block Inc is expected to under-perform the AMP. But the stock apears to be less risky and, when comparing its historical volatility, Block Inc is 1.03 times less risky than AMP. The stock trades about -0.45 of its potential returns per unit of risk. The AMP is currently generating about -0.31 of returns per unit of risk over similar time horizon. If you would invest  174.00  in AMP on December 1, 2024 and sell it today you would lose (38.00) from holding AMP or give up 21.84% of portfolio value over 90 days.

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

Block Inc  vs.  AMP

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. In spite of uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

AMP

Risk-Adjusted Performance

Very Weak

Over the last 90 days AMP has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Block and AMP

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

The idea behind Block Inc and AMP 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.