Correlation Between Buildablock Corp and Digital World

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

By analyzing existing cross correlation between Buildablock Corp and Digital World Acquisition, you can compare the effects of market volatilities on Buildablock Corp and Digital World 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 Buildablock Corp with a short position of Digital World. Check out your portfolio center. Please also check ongoing floating volatility patterns of Buildablock Corp and Digital World.

Diversification Opportunities for Buildablock Corp and Digital World

-0.22

Correlation Coefficient

Buildablock Corp  Digital World

Very good diversification

The 3 months correlation between Buildablock and Digital is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding Buildablock Corp and Digital World Acquisition in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Digital World Acquisition and Buildablock Corp 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 Buildablock Corp are associated (or correlated) with Digital World. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Digital World Acquisition has no effect on the direction of Buildablock Corp i.e., Buildablock Corp and Digital World go up and down completely randomly.

Pair Corralation between Buildablock Corp and Digital World

If you would invest  99.00  in Buildablock Corp on September 14, 2024 and sell it today you would lose (39.00) from holding Buildablock Corp or give up 39.39% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	3.03%
Values	Daily Returns

Buildablock Corp  vs.  Digital World Acquisition

Buildablock Corp

Risk-Adjusted Performance

0 of 100

Modest

Over the last 90 days Buildablock Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite sluggish fundamental drivers, Buildablock Corp disclosed solid returns over the last few months and may actually be approaching a breakup point.

Digital World Acquisition

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Digital World Acquisition has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable fundamental indicators, Digital World is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Buildablock Corp and Digital World

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

The idea behind Buildablock Corp and Digital World Acquisition 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 Global Correlations module to find global opportunities by holding instruments from different markets.