Correlation Between Block and Treasury Wine

Specify exactly 2 symbols:
Can any of the company-specific risk be diversified away by investing in both Block and Treasury Wine 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 Treasury Wine into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Block Inc and Treasury Wine Estates, you can compare the effects of market volatilities on Block and Treasury Wine 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 Treasury Wine. Check out your portfolio center. Please also check ongoing floating volatility patterns of Block and Treasury Wine.

Diversification Opportunities for Block and Treasury Wine

-0.26
  Correlation Coefficient

Very good diversification

The 3 months correlation between Block and Treasury is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding Block Inc and Treasury Wine Estates in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Treasury Wine Estates 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 Treasury Wine. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Treasury Wine Estates has no effect on the direction of Block i.e., Block and Treasury Wine go up and down completely randomly.

Pair Corralation between Block and Treasury Wine

Assuming the 90 days trading horizon Block Inc is expected to generate 2.55 times more return on investment than Treasury Wine. However, Block is 2.55 times more volatile than Treasury Wine Estates. It trades about 0.16 of its potential returns per unit of risk. Treasury Wine Estates is currently generating about -0.02 per unit of risk. If you would invest  11,490  in Block Inc on October 7, 2024 and sell it today you would earn a total of  2,510  from holding Block Inc or generate 21.85% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Block Inc  vs.  Treasury Wine Estates

 Performance 
       Timeline  
Block Inc 

Risk-Adjusted Performance

16 of 100

 
Weak
 
Strong
Solid
Compared to the overall equity markets, risk-adjusted returns on investments in Block Inc are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Block unveiled solid returns over the last few months and may actually be approaching a breakup point.
Treasury Wine Estates 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Treasury Wine Estates has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable technical and fundamental indicators, Treasury Wine is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Block and Treasury Wine Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Block and Treasury Wine

The main advantage of trading using opposite Block and Treasury Wine positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Block position performs unexpectedly, Treasury Wine 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 Treasury Wine will offset losses from the drop in Treasury Wine's long position.
The idea behind Block Inc and Treasury Wine Estates 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.
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.

Other Complementary Tools

Sign In To Macroaxis
Sign in to explore Macroaxis' wealth optimization platform and fintech modules
Idea Optimizer
Use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio
Bollinger Bands
Use Bollinger Bands indicator to analyze target price for a given investing horizon
My Watchlist Analysis
Analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like
Sectors
List of equity sectors categorizing publicly traded companies based on their primary business activities