Correlation Between Block and Ab Global

Can any of the company-specific risk be diversified away by investing in both Block and Ab Global 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 Ab Global into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Block Inc and Ab Global E, you can compare the effects of market volatilities on Block and Ab Global 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 Ab Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Block and Ab Global.

Diversification Opportunities for Block and Ab Global

0.3

Correlation Coefficient

Block  Ab Global

Weak diversification

The 3 months correlation between Block and GCEAX is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding Block Inc and Ab Global E in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ab Global E 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 Ab Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ab Global E has no effect on the direction of Block i.e., Block and Ab Global go up and down completely randomly.

Pair Corralation between Block and Ab Global

Allowing for the 90-day total investment horizon Block Inc is expected to generate 5.61 times more return on investment than Ab Global. However, Block is 5.61 times more volatile than Ab Global E. It trades about 0.06 of its potential returns per unit of risk. Ab Global E is currently generating about 0.18 per unit of risk. If you would invest  6,573  in Block Inc on February 19, 2024 and sell it today you would earn a total of  653.00  from holding Block Inc or generate 9.93% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Block Inc  vs.  Ab Global E

Block Inc

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Block Inc are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Even with relatively abnormal basic indicators, Block reported solid returns over the last few months and may actually be approaching a breakup point.

Ab Global E

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Ab Global E are ranked lower than 13 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Ab Global may actually be approaching a critical reversion point that can send shares even higher in June 2024.

Pair Trading with Block and Ab Global

The main advantage of trading using opposite Block and Ab Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Block position performs unexpectedly, Ab Global 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 Ab Global will offset losses from the drop in Ab Global's long position.

The idea behind Block Inc and Ab Global E 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.

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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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.