Correlation Between Bloom Select and Fidelity Canadian

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

Diversification Opportunities for Bloom Select and Fidelity Canadian

0.63

Correlation Coefficient

Bloom Select  Fidelity Canadian

Poor diversification

The 3 months correlation between Bloom and Fidelity is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Bloom Select Income and Fidelity Canadian Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity Canadian 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 Fidelity Canadian. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fidelity Canadian Growth has no effect on the direction of Bloom Select i.e., Bloom Select and Fidelity Canadian go up and down completely randomly.

Pair Corralation between Bloom Select and Fidelity Canadian

Assuming the 90 days trading horizon Bloom Select is expected to generate 9.93 times less return on investment than Fidelity Canadian. In addition to that, Bloom Select is 2.24 times more volatile than Fidelity Canadian Growth. It trades about 0.02 of its total potential returns per unit of risk. Fidelity Canadian Growth is currently generating about 0.37 per unit of volatility. If you would invest  10,185  in Fidelity Canadian Growth on September 3, 2024 and sell it today you would earn a total of  1,518  from holding Fidelity Canadian Growth or generate 14.9% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	90.48%
Values	Daily Returns

Bloom Select Income  vs.  Fidelity Canadian Growth

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 Canadian Growth

Risk-Adjusted Performance

29 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Fidelity Canadian Growth are ranked lower than 29 (%) of all funds and portfolios of funds over the last 90 days. Despite somewhat weak fundamental indicators, Fidelity Canadian sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Bloom Select and Fidelity Canadian

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

The idea behind Bloom Select Income and Fidelity Canadian 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.