Correlation Between Block and AvePoint
Can any of the company-specific risk be diversified away by investing in both Block and AvePoint 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 AvePoint into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Block Inc and AvePoint, you can compare the effects of market volatilities on Block and AvePoint 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 AvePoint. Check out your portfolio center. Please also check ongoing floating volatility patterns of Block and AvePoint.
Diversification Opportunities for Block and AvePoint
Almost no diversification
The 3 months correlation between Block and AvePoint is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Block Inc and AvePoint in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AvePoint 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 AvePoint. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AvePoint has no effect on the direction of Block i.e., Block and AvePoint go up and down completely randomly.
Pair Corralation between Block and AvePoint
Allowing for the 90-day total investment horizon Block is expected to generate 3.16 times less return on investment than AvePoint. But when comparing it to its historical volatility, Block Inc is 2.0 times less risky than AvePoint. It trades about 0.2 of its potential returns per unit of risk. AvePoint is currently generating about 0.32 of returns per unit of risk over similar time horizon. If you would invest 249.00 in AvePoint on September 3, 2024 and sell it today you would earn a total of 405.00 from holding AvePoint or generate 162.65% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 96.88% |
| Values | Daily Returns |
Block Inc vs. AvePoint
Performance |
| Timeline |
| Block Inc |
| AvePoint |
Block and AvePoint Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Block and AvePoint
The main advantage of trading using opposite Block and AvePoint positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Block position performs unexpectedly, AvePoint 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 AvePoint will offset losses from the drop in AvePoint's long position.The idea behind Block Inc and AvePoint 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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