Correlation Between Mawer Equity and Bloom Select

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

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

Diversification Opportunities for Mawer Equity and Bloom Select

-0.08

Correlation Coefficient

Mawer Equity  Bloom Select

Good diversification

The 3 months correlation between Mawer and Bloom is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding Mawer Equity A 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 Mawer Equity 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 Mawer Equity A 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 Mawer Equity i.e., Mawer Equity and Bloom Select go up and down completely randomly.

Pair Corralation between Mawer Equity and Bloom Select

Assuming the 90 days trading horizon Mawer Equity A is expected to generate 0.47 times more return on investment than Bloom Select. However, Mawer Equity A is 2.13 times less risky than Bloom Select. It trades about 0.18 of its potential returns per unit of risk. Bloom Select Income is currently generating about 0.01 per unit of risk. If you would invest  9,670  in Mawer Equity A on September 14, 2024 and sell it today you would earn a total of  658.00  from holding Mawer Equity A or generate 6.8% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.24%
Values	Daily Returns

Mawer Equity A  vs.  Bloom Select Income

Mawer Equity A

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Mawer Equity A are ranked lower than 13 (%) of all funds and portfolios of funds over the last 90 days. Despite somewhat unfluctuating basic indicators, Mawer Equity may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Bloom Select Income

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Bloom Select Income are ranked lower than 1 (%) of all funds and portfolios of funds over the last 90 days. 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 Mawer Equity and Bloom Select

The main advantage of trading using opposite Mawer Equity and Bloom Select positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mawer Equity 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 Mawer Equity A 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.