Correlation Between Block and Maximus
Can any of the company-specific risk be diversified away by investing in both Block and Maximus 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 Maximus into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Block Inc and Maximus, you can compare the effects of market volatilities on Block and Maximus 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 Maximus. Check out your portfolio center. Please also check ongoing floating volatility patterns of Block and Maximus.
Diversification Opportunities for Block and Maximus
Pay attention - limited upside
The 3 months correlation between Block and Maximus is -0.78. Overlapping area represents the amount of risk that can be diversified away by holding Block Inc and Maximus in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Maximus 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 Maximus. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Maximus has no effect on the direction of Block i.e., Block and Maximus go up and down completely randomly.
Pair Corralation between Block and Maximus
Allowing for the 90-day total investment horizon Block Inc is expected to generate 1.61 times more return on investment than Maximus. However, Block is 1.61 times more volatile than Maximus. It trades about 0.23 of its potential returns per unit of risk. Maximus is currently generating about -0.29 per unit of risk. If you would invest 6,713 in Block Inc on August 30, 2024 and sell it today you would earn a total of 2,188 from holding Block Inc or generate 32.59% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 97.73% |
| Values | Daily Returns |
Block Inc vs. Maximus
Performance |
| Timeline |
| Block Inc |
| Maximus |
Block and Maximus Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Block and Maximus
The main advantage of trading using opposite Block and Maximus positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Block position performs unexpectedly, Maximus 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 Maximus will offset losses from the drop in Maximus' long position.The idea behind Block Inc and Maximus 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.| Maximus vs. Network 1 Technologies | Maximus vs. First Advantage Corp | Maximus vs. BrightView Holdings | Maximus vs. Civeo Corp |
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.
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