Correlation Between Bloom Select and Sustainable Innovation

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

Diversification Opportunities for Bloom Select and Sustainable Innovation

0.21

Correlation Coefficient

Bloom Select  Sustainable Innovation

Modest diversification

The 3 months correlation between Bloom and Sustainable is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Bloom Select Income and Sustainable Innovation Health in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sustainable Innovation 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 Sustainable Innovation. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sustainable Innovation has no effect on the direction of Bloom Select i.e., Bloom Select and Sustainable Innovation go up and down completely randomly.

Pair Corralation between Bloom Select and Sustainable Innovation

Assuming the 90 days trading horizon Bloom Select Income is expected to under-perform the Sustainable Innovation. But the fund apears to be less risky and, when comparing its historical volatility, Bloom Select Income is 1.39 times less risky than Sustainable Innovation. The fund trades about -0.04 of its potential returns per unit of risk. The Sustainable Innovation Health is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  1,312  in Sustainable Innovation Health on December 3, 2024 and sell it today you would earn a total of  20.00  from holding Sustainable Innovation Health or generate 1.52% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	96.72%
Values	Daily Returns

Bloom Select Income  vs.  Sustainable Innovation Health

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.

Sustainable Innovation

Risk-Adjusted Performance

Insignificant

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

Pair Trading with Bloom Select and Sustainable Innovation

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

The idea behind Bloom Select Income and Sustainable Innovation Health 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.