Correlation Between Block and Ezcorp

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

Diversification Opportunities for Block and Ezcorp

0.6
  Correlation Coefficient

Poor diversification

The 3 months correlation between Block and Ezcorp is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Block Inc and Ezcorp Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ezcorp Inc 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 Ezcorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ezcorp Inc has no effect on the direction of Block i.e., Block and Ezcorp go up and down completely randomly.

Pair Corralation between Block and Ezcorp

Allowing for the 90-day total investment horizon Block Inc is expected to under-perform the Ezcorp. In addition to that, Block is 2.64 times more volatile than Ezcorp Inc. It trades about -0.2 of its total potential returns per unit of risk. Ezcorp Inc is currently generating about -0.2 per unit of volatility. If you would invest  844.00  in Ezcorp Inc on July 5, 2022 and sell it today you would lose (53.00)  from holding Ezcorp Inc or give up 6.28% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

Block Inc  vs.  Ezcorp Inc

 Performance (%) 
       Timeline  
Block Inc 
Block Performance
0 of 100
Over the last 90 days Block Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm insiders.

Block Price Channel

Ezcorp Inc 
Ezcorp Performance
3 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Ezcorp Inc are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, Ezcorp is not utilizing all of its potentials. The new stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Ezcorp Price Channel

Block and Ezcorp Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Block and Ezcorp

The main advantage of trading using opposite Block and Ezcorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Block position performs unexpectedly, Ezcorp 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 Ezcorp will offset losses from the drop in Ezcorp's long position.
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The idea behind Block Inc and Ezcorp Inc 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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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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.

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