Correlation Between Block and Mogo
Can any of the company-specific risk be diversified away by investing in both Block and Mogo 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 Mogo into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Block Inc and Mogo Inc, you can compare the effects of market volatilities on Block and Mogo 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 Mogo. Check out your portfolio center. Please also check ongoing floating volatility patterns of Block and Mogo.
Diversification Opportunities for Block and Mogo
Very weak diversification
The 3 months correlation between Block and Mogo is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Block Inc and Mogo Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mogo Inc 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 Mogo. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mogo Inc has no effect on the direction of Block i.e., Block and Mogo go up and down completely randomly.
Pair Corralation between Block and Mogo
Allowing for the 90-day total investment horizon Block is expected to generate 2.12 times less return on investment than Mogo. But when comparing it to its historical volatility, Block Inc is 1.94 times less risky than Mogo. It trades about 0.26 of its potential returns per unit of risk. Mogo Inc is currently generating about 0.28 of returns per unit of risk over similar time horizon. If you would invest 99.00 in Mogo Inc on August 28, 2024 and sell it today you would earn a total of 48.00 from holding Mogo Inc or generate 48.48% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Block Inc vs. Mogo Inc
Performance |
| Timeline |
| Block Inc |
| Mogo Inc |
Block and Mogo Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Block and Mogo
The main advantage of trading using opposite Block and Mogo positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Block position performs unexpectedly, Mogo 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 Mogo will offset losses from the drop in Mogo's long position.The idea behind Block Inc and Mogo Inc 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.| Mogo vs. Katapult Holdings Equity | Mogo vs. International Money Express | Mogo vs. Bakkt Holdings | Mogo vs. Kaltura |
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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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