Correlation Between Blue Ribbon and Bloom Select

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

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

Diversification Opportunities for Blue Ribbon and Bloom Select

0.44

Correlation Coefficient

Blue Ribbon  Bloom Select

Very weak diversification

The 3 months correlation between Blue and Bloom is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Blue Ribbon 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 Blue Ribbon 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 Blue Ribbon 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 Blue Ribbon i.e., Blue Ribbon and Bloom Select go up and down completely randomly.

Pair Corralation between Blue Ribbon and Bloom Select

Assuming the 90 days trading horizon Blue Ribbon Income is expected to under-perform the Bloom Select. In addition to that, Blue Ribbon is 1.45 times more volatile than Bloom Select Income. It trades about -0.12 of its total potential returns per unit of risk. Bloom Select Income is currently generating about 0.04 per unit of volatility. If you would invest  780.00  in Bloom Select Income on December 31, 2024 and sell it today you would earn a total of  11.00  from holding Bloom Select Income or generate 1.41% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	73.02%
Values	Daily Returns

Blue Ribbon Income  vs.  Bloom Select Income

Blue Ribbon Income

Risk-Adjusted Performance

Very Weak

Over the last 90 days Blue Ribbon Income has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Bloom Select Income

Risk-Adjusted Performance

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 Blue Ribbon and Bloom Select

The main advantage of trading using opposite Blue Ribbon and Bloom Select positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Blue Ribbon 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 Blue Ribbon 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.

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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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.