Correlation Between Block and Willdan

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

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

Diversification Opportunities for Block and Willdan

-0.31

Correlation Coefficient

Block  Willdan

Very good diversification

The 3 months correlation between Block and Willdan is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Block Inc and Willdan Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Willdan Group 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 Willdan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Willdan Group has no effect on the direction of Block i.e., Block and Willdan go up and down completely randomly.

Pair Corralation between Block and Willdan

Allowing for the 90-day total investment horizon Block Inc is expected to generate 2.28 times more return on investment than Willdan. However, Block is 2.28 times more volatile than Willdan Group. It trades about 0.02 of its potential returns per unit of risk. Willdan Group is currently generating about -0.44 per unit of risk. If you would invest  8,855  in Block Inc on September 29, 2024 and sell it today you would earn a total of  42.00  from holding Block Inc or generate 0.47% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Block Inc  vs.  Willdan Group

Block Inc

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Block Inc are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Block reported solid returns over the last few months and may actually be approaching a breakup point.

Willdan Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Willdan Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy fundamental indicators, Willdan is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Block and Willdan

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

The idea behind Block Inc and Willdan Group 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.