Correlation Between Block and Genpact

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Can any of the company-specific risk be diversified away by investing in both Block and Genpact 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 Genpact into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Block Inc and Genpact Limited, you can compare the effects of market volatilities on Block and Genpact 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 Genpact. Check out your portfolio center. Please also check ongoing floating volatility patterns of Block and Genpact.

Diversification Opportunities for Block and Genpact

-0.53
  Correlation Coefficient

Excellent diversification

The 3 months correlation between Block and Genpact is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding Block Inc and Genpact Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Genpact 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 Genpact. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Genpact Limited has no effect on the direction of Block i.e., Block and Genpact go up and down completely randomly.

Pair Corralation between Block and Genpact

Allowing for the 90-day total investment horizon Block Inc is expected to generate 2.63 times more return on investment than Genpact. However, Block is 2.63 times more volatile than Genpact Limited. It trades about -0.01 of its potential returns per unit of risk. Genpact Limited is currently generating about -0.03 per unit of risk. If you would invest  14,684  in Block Inc on December 19, 2023 and sell it today you would lose (6,598) from holding Block Inc or give up 44.93% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

Block Inc  vs.  Genpact Limited

 Performance 
       Timeline  
Block Inc 

Risk-Adjusted Performance

2 of 100

 
Low
 
High
Weak
Compared to the overall equity markets, risk-adjusted returns on investments in Block Inc are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Even with relatively uncertain basic indicators, Block may actually be approaching a critical reversion point that can send shares even higher in April 2024.
Genpact Limited 

Risk-Adjusted Performance

0 of 100

 
Low
 
High
Very Weak
Over the last 90 days Genpact Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable technical and fundamental indicators, Genpact is not utilizing all of its potentials. The recent stock price disturbance, may contribute to mid-run losses for the stockholders.

Block and Genpact Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Block and Genpact

The main advantage of trading using opposite Block and Genpact positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Block position performs unexpectedly, Genpact 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 Genpact will offset losses from the drop in Genpact's long position.
The idea behind Block Inc and Genpact Limited 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.
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.

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