Correlation Between Bloom Select and Mackenzie Bluewater

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

Diversification Opportunities for Bloom Select and Mackenzie Bluewater

0.12

Correlation Coefficient

Bloom Select  Mackenzie Bluewater

Average diversification

The 3 months correlation between Bloom and Mackenzie is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding Bloom Select Income and Mackenzie Bluewater Canadian in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mackenzie Bluewater 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 Mackenzie Bluewater. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mackenzie Bluewater has no effect on the direction of Bloom Select i.e., Bloom Select and Mackenzie Bluewater go up and down completely randomly.

Pair Corralation between Bloom Select and Mackenzie Bluewater

Assuming the 90 days trading horizon Bloom Select is expected to generate 2.1 times less return on investment than Mackenzie Bluewater. In addition to that, Bloom Select is 1.43 times more volatile than Mackenzie Bluewater Canadian. It trades about 0.02 of its total potential returns per unit of risk. Mackenzie Bluewater Canadian is currently generating about 0.06 per unit of volatility. If you would invest  1,635  in Mackenzie Bluewater Canadian on December 4, 2024 and sell it today you would earn a total of  291.00  from holding Mackenzie Bluewater Canadian or generate 17.8% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.73%
Values	Daily Returns

Bloom Select Income  vs.  Mackenzie Bluewater Canadian

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.

Mackenzie Bluewater

Risk-Adjusted Performance

Very Weak

Over the last 90 days Mackenzie Bluewater Canadian has generated negative risk-adjusted returns adding no value to fund investors. Despite somewhat strong fundamental indicators, Mackenzie Bluewater 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 Mackenzie Bluewater

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

The idea behind Bloom Select Income and Mackenzie Bluewater Canadian 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.