Correlation Between Block and FSA
Can any of the company-specific risk be diversified away by investing in both Block and FSA 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 FSA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Block Inc and FSA Group, you can compare the effects of market volatilities on Block and FSA 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 FSA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Block and FSA.
Diversification Opportunities for Block and FSA
Excellent diversification
The 3 months correlation between Block and FSA is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding Block Inc and FSA Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FSA Group 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 FSA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FSA Group has no effect on the direction of Block i.e., Block and FSA go up and down completely randomly.
Pair Corralation between Block and FSA
Assuming the 90 days trading horizon Block Inc is expected to generate 1.49 times more return on investment than FSA. However, Block is 1.49 times more volatile than FSA Group. It trades about 0.24 of its potential returns per unit of risk. FSA Group is currently generating about -0.06 per unit of risk. If you would invest 9,538 in Block Inc on August 29, 2024 and sell it today you would earn a total of 4,331 from holding Block Inc or generate 45.41% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 98.46% |
| Values | Daily Returns |
Block Inc vs. FSA Group
Performance |
| Timeline |
| Block Inc |
| FSA Group |
Block and FSA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Block and FSA
The main advantage of trading using opposite Block and FSA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Block position performs unexpectedly, FSA 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 FSA will offset losses from the drop in FSA's long position.| Block vs. Alternative Investment Trust | Block vs. BlackWall Property Funds | Block vs. Australian United Investment | Block vs. Garda Diversified Ppty |
| FSA vs. MFF Capital Investments | FSA vs. REGAL ASIAN INVESTMENTS | FSA vs. Stelar Metals | FSA vs. Sky Metals |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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