Correlation Between BloomZ Ordinary and Stantec

Can any of the company-specific risk be diversified away by investing in both BloomZ Ordinary and Stantec 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 BloomZ Ordinary and Stantec into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between BloomZ Ordinary Shares and Stantec, you can compare the effects of market volatilities on BloomZ Ordinary and Stantec 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 BloomZ Ordinary with a short position of Stantec. Check out your portfolio center. Please also check ongoing floating volatility patterns of BloomZ Ordinary and Stantec.

Diversification Opportunities for BloomZ Ordinary and Stantec

-0.7

Correlation Coefficient

BloomZ Ordinary  Stantec

Excellent diversification

The 3 months correlation between BloomZ and Stantec is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding BloomZ Ordinary Shares and Stantec in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Stantec and BloomZ Ordinary 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 BloomZ Ordinary Shares are associated (or correlated) with Stantec. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Stantec has no effect on the direction of BloomZ Ordinary i.e., BloomZ Ordinary and Stantec go up and down completely randomly.

Pair Corralation between BloomZ Ordinary and Stantec

Given the investment horizon of 90 days BloomZ Ordinary Shares is expected to under-perform the Stantec. In addition to that, BloomZ Ordinary is 10.18 times more volatile than Stantec. It trades about -0.08 of its total potential returns per unit of risk. Stantec is currently generating about 0.1 per unit of volatility. If you would invest  7,801  in Stantec on September 12, 2024 and sell it today you would earn a total of  651.00  from holding Stantec or generate 8.35% return on investment over 90 days.

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

BloomZ Ordinary Shares  vs.  Stantec

BloomZ Ordinary Shares

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days BloomZ Ordinary Shares has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's primary indicators remain fairly strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Stantec

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Stantec are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of very fragile basic indicators, Stantec may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with BloomZ Ordinary and Stantec

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

The idea behind BloomZ Ordinary Shares and Stantec 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.