Correlation Between Block and PagSeguro Digital
Can any of the company-specific risk be diversified away by investing in both Block and PagSeguro Digital 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 PagSeguro Digital into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Block Inc and PagSeguro Digital, you can compare the effects of market volatilities on Block and PagSeguro Digital 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 PagSeguro Digital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Block and PagSeguro Digital.
Diversification Opportunities for Block and PagSeguro Digital
-0.39 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Block and PagSeguro is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Block Inc and PagSeguro Digital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PagSeguro Digital 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 PagSeguro Digital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PagSeguro Digital has no effect on the direction of Block i.e., Block and PagSeguro Digital go up and down completely randomly.
Pair Corralation between Block and PagSeguro Digital
Assuming the 90 days trading horizon Block Inc is expected to generate 1.15 times more return on investment than PagSeguro Digital. However, Block is 1.15 times more volatile than PagSeguro Digital. It trades about 0.03 of its potential returns per unit of risk. PagSeguro Digital is currently generating about 0.01 per unit of risk. If you would invest 1,600 in Block Inc on November 2, 2024 and sell it today you would earn a total of 490.00 from holding Block Inc or generate 30.63% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 98.59% |
| Values | Daily Returns |
Block Inc vs. PagSeguro Digital
Performance |
| Timeline |
| Block Inc |
| PagSeguro Digital |
Block and PagSeguro Digital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Block and PagSeguro Digital
The main advantage of trading using opposite Block and PagSeguro Digital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Block position performs unexpectedly, PagSeguro Digital 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 PagSeguro Digital will offset losses from the drop in PagSeguro Digital's long position.| Block vs. METISA Metalrgica Timboense | Block vs. Metalrgica Riosulense SA | Block vs. Fidelity National Information | Block vs. Datadog, |
| PagSeguro Digital vs. Air Products and | PagSeguro Digital vs. Ryanair Holdings plc | PagSeguro Digital vs. Marfrig Global Foods | PagSeguro Digital vs. Metalrgica Riosulense SA |
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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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