Correlation Between Australian REIT and Bloom Select

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

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

Diversification Opportunities for Australian REIT and Bloom Select

0.0

Correlation Coefficient

Australian REIT  Bloom Select

Pay attention - limited upside

The 3 months correlation between Australian and Bloom is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Australian REIT Income and Bloom Select Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bloom Select Income and Australian REIT 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 Australian REIT Income are associated (or correlated) with Bloom Select. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bloom Select Income has no effect on the direction of Australian REIT i.e., Australian REIT and Bloom Select go up and down completely randomly.

Pair Corralation between Australian REIT and Bloom Select

If you would invest  791.00  in Bloom Select Income on September 3, 2024 and sell it today you would earn a total of  6.00  from holding Bloom Select Income or generate 0.76% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	89.06%
Values	Daily Returns

Australian REIT Income  vs.  Bloom Select Income

Australian REIT Income

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Australian REIT Income has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Australian REIT is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Bloom Select Income

Risk-Adjusted Performance

0 of 100

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.

Pair Trading with Australian REIT and Bloom Select

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

The idea behind Australian REIT Income and Bloom Select Income 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.