Correlation Between Bloom Select and Manulife Global

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

Diversification Opportunities for Bloom Select and Manulife Global

-0.05

Correlation Coefficient

Bloom Select  Manulife Global

Good diversification

The 3 months correlation between Bloom and Manulife is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding Bloom Select Income and Manulife Global Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Manulife Global Equity 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 Manulife Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Manulife Global Equity has no effect on the direction of Bloom Select i.e., Bloom Select and Manulife Global go up and down completely randomly.

Pair Corralation between Bloom Select and Manulife Global

Assuming the 90 days trading horizon Bloom Select is expected to generate 1.87 times less return on investment than Manulife Global. In addition to that, Bloom Select is 2.32 times more volatile than Manulife Global Equity. It trades about 0.02 of its total potential returns per unit of risk. Manulife Global Equity is currently generating about 0.1 per unit of volatility. If you would invest  5,147  in Manulife Global Equity on September 4, 2024 and sell it today you would earn a total of  169.00  from holding Manulife Global Equity or generate 3.28% 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.  Manulife Global Equity

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.

Manulife Global Equity

Risk-Adjusted Performance

7 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Manulife Global Equity are ranked lower than 7 (%) of all funds and portfolios of funds over the last 90 days. Despite somewhat strong basic indicators, Manulife Global is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Bloom Select and Manulife Global

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

The idea behind Bloom Select Income and Manulife Global Equity 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.