Correlation Between Block and Light Wonder
Can any of the company-specific risk be diversified away by investing in both Block and Light Wonder 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 Light Wonder into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Block Inc and Light Wonder, you can compare the effects of market volatilities on Block and Light Wonder 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 Light Wonder. Check out your portfolio center. Please also check ongoing floating volatility patterns of Block and Light Wonder.
Diversification Opportunities for Block and Light Wonder
-0.69 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Block and Light is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding Block Inc and Light Wonder in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Light Wonder 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 Light Wonder. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Light Wonder has no effect on the direction of Block i.e., Block and Light Wonder go up and down completely randomly.
Pair Corralation between Block and Light Wonder
Assuming the 90 days trading horizon Block Inc is expected to under-perform the Light Wonder. In addition to that, Block is 1.21 times more volatile than Light Wonder. It trades about -0.17 of its total potential returns per unit of risk. Light Wonder is currently generating about 0.11 per unit of volatility. If you would invest 15,219 in Light Wonder on December 3, 2024 and sell it today you would earn a total of 2,408 from holding Light Wonder or generate 15.82% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Block Inc vs. Light Wonder
Performance |
Timeline |
Block Inc |
Light Wonder |
Block and Light Wonder Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Block and Light Wonder
The main advantage of trading using opposite Block and Light Wonder positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Block position performs unexpectedly, Light Wonder 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 Light Wonder will offset losses from the drop in Light Wonder's long position.Block vs. Qbe Insurance Group | Block vs. Bailador Technology Invest | Block vs. Stelar Metals | Block vs. Aeon Metals |
Light Wonder vs. Australian United Investment | Light Wonder vs. Arc Funds | Light Wonder vs. AiMedia Technologies | Light Wonder vs. Alternative Investment Trust |
Check out your portfolio center.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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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