Correlation Between Block and Verint Systems
Can any of the company-specific risk be diversified away by investing in both Block and Verint Systems 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 Verint Systems into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Block Inc and Verint Systems, you can compare the effects of market volatilities on Block and Verint Systems 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 Verint Systems. Check out your portfolio center. Please also check ongoing floating volatility patterns of Block and Verint Systems.
Diversification Opportunities for Block and Verint Systems
-0.4 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Block and Verint is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Block Inc and Verint Systems in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Verint Systems 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 Verint Systems. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Verint Systems has no effect on the direction of Block i.e., Block and Verint Systems go up and down completely randomly.
Pair Corralation between Block and Verint Systems
Allowing for the 90-day total investment horizon Block Inc is expected to generate 1.01 times more return on investment than Verint Systems. However, Block is 1.01 times more volatile than Verint Systems. It trades about 0.04 of its potential returns per unit of risk. Verint Systems is currently generating about -0.03 per unit of risk. If you would invest 7,449 in Block Inc on August 26, 2024 and sell it today you would earn a total of 1,777 from holding Block Inc or generate 23.86% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Block Inc vs. Verint Systems
Performance |
| Timeline |
| Block Inc |
| Verint Systems |
Block and Verint Systems Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Block and Verint Systems
The main advantage of trading using opposite Block and Verint Systems positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Block position performs unexpectedly, Verint Systems 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 Verint Systems will offset losses from the drop in Verint Systems' long position.The idea behind Block Inc and Verint Systems 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.| Verint Systems vs. GigaCloud Technology Class | Verint Systems vs. Arqit Quantum | Verint Systems vs. Telos Corp | Verint Systems vs. Cemtrex |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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