Correlation Between Bloom Select and TD Comfort

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

Diversification Opportunities for Bloom Select and TD Comfort

0.09

Correlation Coefficient

Bloom Select  TD Comfort

Significant diversification

The 3 months correlation between Bloom and 0P0001FAU8 is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding Bloom Select Income and TD Comfort Balanced in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TD Comfort Balanced 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 TD Comfort. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TD Comfort Balanced has no effect on the direction of Bloom Select i.e., Bloom Select and TD Comfort go up and down completely randomly.

Pair Corralation between Bloom Select and TD Comfort

Assuming the 90 days trading horizon Bloom Select Income is expected to under-perform the TD Comfort. In addition to that, Bloom Select is 1.98 times more volatile than TD Comfort Balanced. It trades about -0.04 of its total potential returns per unit of risk. TD Comfort Balanced is currently generating about 0.01 per unit of volatility. If you would invest  1,322  in TD Comfort Balanced on December 2, 2024 and sell it today you would earn a total of  1.00  from holding TD Comfort Balanced or generate 0.08% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	96.77%
Values	Daily Returns

Bloom Select Income  vs.  TD Comfort Balanced

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.

TD Comfort Balanced

Risk-Adjusted Performance

Very Weak

Over the last 90 days TD Comfort Balanced has generated negative risk-adjusted returns adding no value to fund investors. Despite nearly stable technical and fundamental indicators, TD Comfort is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Bloom Select and TD Comfort

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

The idea behind Bloom Select Income and TD Comfort Balanced 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.

Check out your portfolio center.

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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.