Correlation Between Deluxe and Block
Can any of the company-specific risk be diversified away by investing in both Deluxe 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 Deluxe and Block into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Deluxe and Block Inc, you can compare the effects of market volatilities on Deluxe 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 Deluxe with a short position of Block. Check out your portfolio center. Please also check ongoing floating volatility patterns of Deluxe and Block.
Diversification Opportunities for Deluxe and Block
Poor diversification
The 3 months correlation between Deluxe and Block is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Deluxe and Block Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Block Inc and Deluxe 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 Deluxe 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 Deluxe i.e., Deluxe and Block go up and down completely randomly.
Pair Corralation between Deluxe and Block
Considering the 90-day investment horizon Deluxe is expected to generate 2.35 times less return on investment than Block. But when comparing it to its historical volatility, Deluxe is 1.17 times less risky than Block. It trades about 0.1 of its potential returns per unit of risk. Block Inc is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest 6,556 in Block Inc on August 26, 2024 and sell it today you would earn a total of 2,670 from holding Block Inc or generate 40.73% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Deluxe vs. Block Inc
Performance |
| Timeline |
| Deluxe |
| Block Inc |
Deluxe and Block Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Deluxe and Block
The main advantage of trading using opposite Deluxe and Block positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Deluxe 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.| Deluxe vs. Park Electrochemical | Deluxe vs. Innovative Solutions and | Deluxe vs. Curtiss Wright | Deluxe vs. National Presto Industries |
| Block vs. Oneconnect Financial Technology | Block vs. Global Business Travel | Block vs. Alight Inc | Block vs. CS Disco LLC |
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 Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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