Correlation Between Edgepoint Global and Bloom Select

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

By analyzing existing cross correlation between Edgepoint Global Portfolio and Bloom Select Income, you can compare the effects of market volatilities on Edgepoint Global and Bloom Select 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 Edgepoint Global with a short position of Bloom Select. Check out your portfolio center. Please also check ongoing floating volatility patterns of Edgepoint Global and Bloom Select.

Diversification Opportunities for Edgepoint Global and Bloom Select

0.06

Correlation Coefficient

Edgepoint Global  Bloom Select

Significant diversification

The 3 months correlation between Edgepoint and Bloom is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Edgepoint Global Portfolio and Bloom Select Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bloom Select Income and Edgepoint Global 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 Edgepoint Global Portfolio are associated (or correlated) with Bloom Select. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bloom Select Income has no effect on the direction of Edgepoint Global i.e., Edgepoint Global and Bloom Select go up and down completely randomly.

Pair Corralation between Edgepoint Global and Bloom Select

Assuming the 90 days trading horizon Edgepoint Global Portfolio is expected to generate 0.8 times more return on investment than Bloom Select. However, Edgepoint Global Portfolio is 1.25 times less risky than Bloom Select. It trades about -0.02 of its potential returns per unit of risk. Bloom Select Income is currently generating about -0.08 per unit of risk. If you would invest  3,917  in Edgepoint Global Portfolio on November 29, 2024 and sell it today you would lose (37.00) from holding Edgepoint Global Portfolio or give up 0.94% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	95.0%
Values	Daily Returns

Edgepoint Global Portfolio  vs.  Bloom Select Income

Edgepoint Global Por

Risk-Adjusted Performance

Very Weak

Over the last 90 days Edgepoint Global Portfolio has generated negative risk-adjusted returns adding no value to fund investors. Despite fairly strong forward indicators, Edgepoint Global is not utilizing all of its potentials. The new stock price confusion, may contribute to short-horizon losses for the traders.

Bloom Select Income

Risk-Adjusted Performance

Very Weak

Over the last 90 days Bloom Select Income has generated negative risk-adjusted returns adding no value to fund investors. Despite somewhat strong fundamental drivers, Bloom Select is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Edgepoint Global and Bloom Select

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

The idea behind Edgepoint Global Portfolio and Bloom Select Income 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.