Correlation Between Ampol and Block
Can any of the company-specific risk be diversified away by investing in both Ampol and Block 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 Ampol and Block into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ampol and Block Inc, you can compare the effects of market volatilities on Ampol and Block 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 Ampol with a short position of Block. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ampol and Block.
Diversification Opportunities for Ampol and Block
Very good diversification
The 3 months correlation between Ampol and Block is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Ampol and Block Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Block Inc and Ampol 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 Ampol are associated (or correlated) with Block. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Block Inc has no effect on the direction of Ampol i.e., Ampol and Block go up and down completely randomly.
Pair Corralation between Ampol and Block
Assuming the 90 days trading horizon Ampol is expected to generate 4.55 times less return on investment than Block. But when comparing it to its historical volatility, Ampol is 2.19 times less risky than Block. It trades about 0.14 of its potential returns per unit of risk. Block Inc is currently generating about 0.29 of returns per unit of risk over similar time horizon. If you would invest 11,180 in Block Inc on August 31, 2024 and sell it today you would earn a total of 2,612 from holding Block Inc or generate 23.36% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ampol vs. Block Inc
Performance |
| Timeline |
| Ampol |
| Block Inc |
Ampol and Block Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ampol and Block
The main advantage of trading using opposite Ampol and Block positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ampol position performs unexpectedly, Block 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 Block will offset losses from the drop in Block's long position.The idea behind Ampol and Block Inc 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.| Block vs. Viva Leisure | Block vs. Advanced Braking Technology | Block vs. Clime Investment Management | Block vs. Readytech Holdings |
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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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