Correlation Between Block and Mach7 Technologies
Can any of the company-specific risk be diversified away by investing in both Block and Mach7 Technologies 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 Mach7 Technologies into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Block Inc and Mach7 Technologies, you can compare the effects of market volatilities on Block and Mach7 Technologies 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 Mach7 Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Block and Mach7 Technologies.
Diversification Opportunities for Block and Mach7 Technologies
-0.88 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Block and Mach7 is -0.88. Overlapping area represents the amount of risk that can be diversified away by holding Block Inc and Mach7 Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mach7 Technologies 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 Mach7 Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mach7 Technologies has no effect on the direction of Block i.e., Block and Mach7 Technologies go up and down completely randomly.
Pair Corralation between Block and Mach7 Technologies
Assuming the 90 days trading horizon Block Inc is expected to generate 0.99 times more return on investment than Mach7 Technologies. However, Block Inc is 1.01 times less risky than Mach7 Technologies. It trades about 0.12 of its potential returns per unit of risk. Mach7 Technologies is currently generating about -0.18 per unit of risk. If you would invest 10,043 in Block Inc on August 25, 2024 and sell it today you would earn a total of 4,182 from holding Block Inc or generate 41.64% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Block Inc vs. Mach7 Technologies
Performance |
| Timeline |
| Block Inc |
| Mach7 Technologies |
Block and Mach7 Technologies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Block and Mach7 Technologies
The main advantage of trading using opposite Block and Mach7 Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Block position performs unexpectedly, Mach7 Technologies 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 Mach7 Technologies will offset losses from the drop in Mach7 Technologies' long position.The idea behind Block Inc and Mach7 Technologies 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.| Mach7 Technologies vs. Accent Resources NL | Mach7 Technologies vs. Hutchison Telecommunications | Mach7 Technologies vs. GO2 People | Mach7 Technologies vs. Pact Group Holdings |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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