Correlation Between Bloom Select and Fidelity ClearPath

Can any of the company-specific risk be diversified away by investing in both Bloom Select and Fidelity ClearPath 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 ClearPath 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 ClearPath 2045, you can compare the effects of market volatilities on Bloom Select and Fidelity ClearPath 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 ClearPath. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bloom Select and Fidelity ClearPath.

Diversification Opportunities for Bloom Select and Fidelity ClearPath

0.82

Correlation Coefficient

Bloom Select  Fidelity ClearPath

Very poor diversification

The 3 months correlation between Bloom and Fidelity is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Bloom Select Income and Fidelity ClearPath 2045 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity ClearPath 2045 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 ClearPath. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fidelity ClearPath 2045 has no effect on the direction of Bloom Select i.e., Bloom Select and Fidelity ClearPath go up and down completely randomly.

Pair Corralation between Bloom Select and Fidelity ClearPath

Assuming the 90 days trading horizon Bloom Select is expected to generate 4.1 times less return on investment than Fidelity ClearPath. In addition to that, Bloom Select is 2.19 times more volatile than Fidelity ClearPath 2045. It trades about 0.02 of its total potential returns per unit of risk. Fidelity ClearPath 2045 is currently generating about 0.15 per unit of volatility. If you would invest  2,635  in Fidelity ClearPath 2045 on September 2, 2024 and sell it today you would earn a total of  156.00  from holding Fidelity ClearPath 2045 or generate 5.92% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	89.06%
Values	Daily Returns

Bloom Select Income  vs.  Fidelity ClearPath 2045

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.

Fidelity ClearPath 2045

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Fidelity ClearPath 2045 are ranked lower than 11 (%) of all funds and portfolios of funds over the last 90 days. Despite somewhat strong basic indicators, Fidelity ClearPath is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Bloom Select and Fidelity ClearPath

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

The idea behind Bloom Select Income and Fidelity ClearPath 2045 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.