Correlation Between Bloom Select and Tangerine Equity

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

Diversification Opportunities for Bloom Select and Tangerine Equity

0.1

Correlation Coefficient

Bloom Select  Tangerine Equity

Average diversification

The 3 months correlation between Bloom and Tangerine is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding Bloom Select Income and Tangerine Equity Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tangerine Equity Growth 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 Tangerine Equity. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tangerine Equity Growth has no effect on the direction of Bloom Select i.e., Bloom Select and Tangerine Equity go up and down completely randomly.

Pair Corralation between Bloom Select and Tangerine Equity

Assuming the 90 days trading horizon Bloom Select is expected to generate 2.78 times less return on investment than Tangerine Equity. In addition to that, Bloom Select is 2.52 times more volatile than Tangerine Equity Growth. It trades about 0.04 of its total potential returns per unit of risk. Tangerine Equity Growth is currently generating about 0.31 per unit of volatility. If you would invest  1,346  in Tangerine Equity Growth on September 12, 2024 and sell it today you would earn a total of  144.00  from holding Tangerine Equity Growth or generate 10.7% return on investment over 90 days.

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

Bloom Select Income  vs.  Tangerine Equity Growth

Bloom Select Income

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Bloom Select Income are ranked lower than 3 (%) 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.

Tangerine Equity Growth

Risk-Adjusted Performance

24 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Tangerine Equity Growth are ranked lower than 24 (%) of all funds and portfolios of funds over the last 90 days. Despite quite weak forward-looking signals, Tangerine Equity may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Bloom Select and Tangerine Equity

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

The idea behind Bloom Select Income and Tangerine Equity Growth 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.