Correlation Between Solar Alliance and Bloom Select

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

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

Diversification Opportunities for Solar Alliance and Bloom Select

0.68

Correlation Coefficient

Solar Alliance  Bloom Select

Poor diversification

The 3 months correlation between Solar and Bloom is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Solar Alliance Energy 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 Solar Alliance 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 Solar Alliance Energy 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 Solar Alliance i.e., Solar Alliance and Bloom Select go up and down completely randomly.

Pair Corralation between Solar Alliance and Bloom Select

Assuming the 90 days trading horizon Solar Alliance Energy is expected to generate 9.49 times more return on investment than Bloom Select. However, Solar Alliance is 9.49 times more volatile than Bloom Select Income. It trades about 0.01 of its potential returns per unit of risk. Bloom Select Income is currently generating about 0.02 per unit of risk. If you would invest  9.00  in Solar Alliance Energy on October 22, 2024 and sell it today you would lose (6.50) from holding Solar Alliance Energy or give up 72.22% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.79%
Values	Daily Returns

Solar Alliance Energy  vs.  Bloom Select Income

Solar Alliance Energy

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Solar Alliance Energy has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's essential indicators remain fairly stable which may send shares a bit higher in February 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Bloom Select Income

Risk-Adjusted Performance

0 of 100

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.

Pair Trading with Solar Alliance and Bloom Select

The main advantage of trading using opposite Solar Alliance and Bloom Select positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Solar Alliance 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 Solar Alliance Energy 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.