Correlation Between Block and CAR GROUP
Can any of the company-specific risk be diversified away by investing in both Block and CAR GROUP 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 CAR GROUP into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Block Inc and CAR GROUP LIMITED, you can compare the effects of market volatilities on Block and CAR GROUP 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 CAR GROUP. Check out your portfolio center. Please also check ongoing floating volatility patterns of Block and CAR GROUP.
Diversification Opportunities for Block and CAR GROUP
Almost no diversification
The 3 months correlation between Block and CAR is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Block Inc and CAR GROUP LIMITED in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CAR GROUP LIMITED 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 CAR GROUP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CAR GROUP LIMITED has no effect on the direction of Block i.e., Block and CAR GROUP go up and down completely randomly.
Pair Corralation between Block and CAR GROUP
Assuming the 90 days trading horizon Block Inc is expected to generate 2.65 times more return on investment than CAR GROUP. However, Block is 2.65 times more volatile than CAR GROUP LIMITED. It trades about 0.29 of its potential returns per unit of risk. CAR GROUP LIMITED is currently generating about 0.33 per unit of risk. If you would invest 11,168 in Block Inc on September 1, 2024 and sell it today you would earn a total of 2,663 from holding Block Inc or generate 23.84% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Block Inc vs. CAR GROUP LIMITED
Performance |
| Timeline |
| Block Inc |
| CAR GROUP LIMITED |
Block and CAR GROUP Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Block and CAR GROUP
The main advantage of trading using opposite Block and CAR GROUP positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Block position performs unexpectedly, CAR GROUP 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 CAR GROUP will offset losses from the drop in CAR GROUP's long position.| Block vs. Aneka Tambang Tbk | Block vs. Unibail Rodamco Westfield SE | Block vs. Macquarie Group | Block vs. Commonwealth Bank |
| CAR GROUP vs. Westpac Banking | CAR GROUP vs. iShares Global Healthcare | CAR GROUP vs. Australian Dairy Farms | CAR GROUP vs. Adriatic Metals Plc |
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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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