Correlation Between Bloom Select and Fidelity Technology

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

Diversification Opportunities for Bloom Select and Fidelity Technology

-0.33

Correlation Coefficient

Bloom Select  Fidelity Technology

Very good diversification

The 3 months correlation between Bloom and Fidelity is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding Bloom Select Income and Fidelity Technology Innovators in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity Technology 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 Fidelity Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fidelity Technology has no effect on the direction of Bloom Select i.e., Bloom Select and Fidelity Technology go up and down completely randomly.

Pair Corralation between Bloom Select and Fidelity Technology

Assuming the 90 days trading horizon Bloom Select Income is expected to under-perform the Fidelity Technology. In addition to that, Bloom Select is 1.7 times more volatile than Fidelity Technology Innovators. It trades about -0.04 of its total potential returns per unit of risk. Fidelity Technology Innovators is currently generating about 0.18 per unit of volatility. If you would invest  9,845  in Fidelity Technology Innovators on September 23, 2024 and sell it today you would earn a total of  857.00  from holding Fidelity Technology Innovators or generate 8.7% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Bloom Select Income  vs.  Fidelity Technology Innovators

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.

Fidelity Technology

Risk-Adjusted Performance

13 of 100

Good

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

Pair Trading with Bloom Select and Fidelity Technology

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

The idea behind Bloom Select Income and Fidelity Technology Innovators 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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.