Correlation Between Bloom Select and Ninepoint Energy

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

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

Diversification Opportunities for Bloom Select and Ninepoint Energy

-0.09

Correlation Coefficient

Bloom Select  Ninepoint Energy

Good diversification

The 3 months correlation between Bloom and Ninepoint is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding Bloom Select Income and Ninepoint Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ninepoint Energy and Bloom Select 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 Bloom Select Income are associated (or correlated) with Ninepoint Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ninepoint Energy has no effect on the direction of Bloom Select i.e., Bloom Select and Ninepoint Energy go up and down completely randomly.

Pair Corralation between Bloom Select and Ninepoint Energy

Assuming the 90 days trading horizon Bloom Select is expected to generate 1.81 times less return on investment than Ninepoint Energy. But when comparing it to its historical volatility, Bloom Select Income is 1.19 times less risky than Ninepoint Energy. It trades about 0.02 of its potential returns per unit of risk. Ninepoint Energy is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  2,710  in Ninepoint Energy on September 4, 2024 and sell it today you would earn a total of  68.00  from holding Ninepoint Energy or generate 2.51% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.44%
Values	Daily Returns

Bloom Select Income  vs.  Ninepoint Energy

Bloom Select Income

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Bloom Select Income are ranked lower than 1 (%) of all funds and portfolios of funds over the last 90 days. 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.

Ninepoint Energy

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Ninepoint Energy are ranked lower than 2 (%) of all funds and portfolios of funds over the last 90 days. Despite somewhat strong basic indicators, Ninepoint Energy is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Bloom Select and Ninepoint Energy

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

The idea behind Bloom Select Income and Ninepoint Energy 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.