Correlation Between Block and BlackBerry

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

Diversification Opportunities for Block and BlackBerry

0.7
  Correlation Coefficient

Poor diversification

The 3 months correlation between Block and BlackBerry is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Block Inc and BlackBerry in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BlackBerry 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 BlackBerry. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BlackBerry has no effect on the direction of Block i.e., Block and BlackBerry go up and down completely randomly.

Pair Corralation between Block and BlackBerry

Allowing for the 90-day total investment horizon Block Inc is expected to generate 2.05 times more return on investment than BlackBerry. However, Block is 2.05 times more volatile than BlackBerry. It trades about 0.2 of its potential returns per unit of risk. BlackBerry is currently generating about 0.27 per unit of risk. If you would invest  5,464  in Block Inc on September 3, 2022 and sell it today you would earn a total of  1,354  from holding Block Inc or generate 24.78% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

Block Inc  vs.  BlackBerry

 Performance (%) 
       Timeline  
Block Inc 
Block Performance
2 of 100
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. In spite of very unsteady basic indicators, Block may actually be approaching a critical reversion point that can send shares even higher in January 2023.

Block Price Channel

BlackBerry 
BlackBerry Performance
0 of 100
Over the last 90 days BlackBerry has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unsteady performance, the Stock's fundamental drivers remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

BlackBerry Price Channel

Block and BlackBerry Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Block and BlackBerry

The main advantage of trading using opposite Block and BlackBerry positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Block position performs unexpectedly, BlackBerry 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 BlackBerry will offset losses from the drop in BlackBerry's long position.
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The idea behind Block Inc and BlackBerry 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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BlackBerry vs. GROWTH FUND OF
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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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.

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