Correlation Between Block and Gen Digital
Can any of the company-specific risk be diversified away by investing in both Block and Gen 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 Gen 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 Gen Digital, you can compare the effects of market volatilities on Block and Gen 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 Gen Digital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Block and Gen Digital.
Diversification Opportunities for Block and Gen Digital
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Block and Gen is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Block Inc and Gen Digital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gen 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 Gen Digital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gen Digital has no effect on the direction of Block i.e., Block and Gen Digital go up and down completely randomly.
Pair Corralation between Block and Gen Digital
Assuming the 90 days trading horizon Block Inc is expected to generate 4.14 times more return on investment than Gen Digital. However, Block is 4.14 times more volatile than Gen Digital. It trades about 0.03 of its potential returns per unit of risk. Gen Digital is currently generating about -0.21 per unit of risk. If you would invest 2,134 in Block Inc on November 3, 2024 and sell it today you would earn a total of 16.00 from holding Block Inc or generate 0.75% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Block Inc vs. Gen Digital
Performance |
| Timeline |
| Block Inc |
| Gen Digital |
Block and Gen Digital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Block and Gen Digital
The main advantage of trading using opposite Block and Gen Digital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Block position performs unexpectedly, Gen 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 Gen Digital will offset losses from the drop in Gen Digital's long position.| Block vs. Datadog, | Block vs. Medical Properties Trust, | Block vs. Take Two Interactive Software | Block vs. MAHLE Metal Leve |
| Gen Digital vs. United Rentals | Gen Digital vs. Monster Beverage | Gen Digital vs. Ryanair Holdings plc | Gen Digital vs. Live Nation Entertainment, |
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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
Other Complementary Tools
| Investing Opportunities Build portfolios using our predefined set of ideas and optimize them against your investing preferences | |
| Sign In To Macroaxis Sign in to explore Macroaxis' wealth optimization platform and fintech modules | |
| Aroon Oscillator Analyze current equity momentum using Aroon Oscillator and other momentum ratios | |
| Instant Ratings Determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Balance Of Power Check stock momentum by analyzing Balance Of Power indicator and other technical ratios |