Correlation Between Bloom Select and Tangerine Balanced

Can any of the company-specific risk be diversified away by investing in both Bloom Select and Tangerine Balanced 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 Tangerine Balanced 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 Tangerine Balanced Growth, you can compare the effects of market volatilities on Bloom Select and Tangerine Balanced 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 Tangerine Balanced. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bloom Select and Tangerine Balanced.

Diversification Opportunities for Bloom Select and Tangerine Balanced

-0.55

Correlation Coefficient

Bloom Select  Tangerine Balanced

Excellent diversification

The 3 months correlation between Bloom and Tangerine is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding Bloom Select Income and Tangerine Balanced Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tangerine Balanced Growth 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 Tangerine Balanced. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tangerine Balanced Growth has no effect on the direction of Bloom Select i.e., Bloom Select and Tangerine Balanced go up and down completely randomly.

Pair Corralation between Bloom Select and Tangerine Balanced

Assuming the 90 days trading horizon Bloom Select is expected to generate 1.28 times less return on investment than Tangerine Balanced. In addition to that, Bloom Select is 1.91 times more volatile than Tangerine Balanced Growth. It trades about 0.05 of its total potential returns per unit of risk. Tangerine Balanced Growth is currently generating about 0.13 per unit of volatility. If you would invest  1,838  in Tangerine Balanced Growth on October 5, 2024 and sell it today you would earn a total of  388.00  from holding Tangerine Balanced Growth or generate 21.11% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	96.43%
Values	Daily Returns

Bloom Select Income  vs.  Tangerine Balanced Growth

Bloom Select Income

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Bloom Select Income has generated negative risk-adjusted returns adding no value to fund investors. Despite latest weak performance, the Fund's fundamental drivers remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Tangerine Balanced Growth

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Tangerine Balanced Growth are ranked lower than 4 (%) of all funds and portfolios of funds over the last 90 days. Despite somewhat strong basic indicators, Tangerine Balanced 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 Tangerine Balanced

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

The idea behind Bloom Select Income and Tangerine Balanced Growth 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.