Correlation Between Block and Home Consortium
Can any of the company-specific risk be diversified away by investing in both Block and Home Consortium 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 Home Consortium into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Block Inc and Home Consortium, you can compare the effects of market volatilities on Block and Home Consortium 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 Home Consortium. Check out your portfolio center. Please also check ongoing floating volatility patterns of Block and Home Consortium.
Diversification Opportunities for Block and Home Consortium
0.95 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Block and Home is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding Block Inc and Home Consortium in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Home Consortium 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 Home Consortium. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Home Consortium has no effect on the direction of Block i.e., Block and Home Consortium go up and down completely randomly.
Pair Corralation between Block and Home Consortium
Assuming the 90 days trading horizon Block Inc is expected to generate 2.49 times more return on investment than Home Consortium. However, Block is 2.49 times more volatile than Home Consortium. It trades about 0.31 of its potential returns per unit of risk. Home Consortium is currently generating about 0.64 per unit of risk. If you would invest 11,155 in Block Inc on August 29, 2024 and sell it today you would earn a total of 2,714 from holding Block Inc or generate 24.33% 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. Home Consortium
Performance |
| Timeline |
| Block Inc |
| Home Consortium |
Block and Home Consortium Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Block and Home Consortium
The main advantage of trading using opposite Block and Home Consortium positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Block position performs unexpectedly, Home Consortium 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 Home Consortium will offset losses from the drop in Home Consortium's long position.| Block vs. Readytech Holdings | Block vs. WiseTech Global Limited | Block vs. Ainsworth Game Technology | Block vs. Qbe Insurance Group |
| Home Consortium vs. Scentre Group | Home Consortium vs. Vicinity Centres Re | Home Consortium vs. Charter Hall Retail | Home Consortium vs. Cromwell Property Group |
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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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