Correlation Between Brompton Global and Bloom Select
Can any of the company-specific risk be diversified away by investing in both Brompton Global and Bloom Select 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 Brompton Global and Bloom Select into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Brompton Global Dividend and Bloom Select Income, you can compare the effects of market volatilities on Brompton Global and Bloom Select 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 Brompton Global with a short position of Bloom Select. Check out your portfolio center. Please also check ongoing floating volatility patterns of Brompton Global and Bloom Select.
Diversification Opportunities for Brompton Global and Bloom Select
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Brompton and Bloom is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Brompton Global Dividend and Bloom Select Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bloom Select Income and Brompton Global 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 Brompton Global Dividend are associated (or correlated) with Bloom Select. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bloom Select Income has no effect on the direction of Brompton Global i.e., Brompton Global and Bloom Select go up and down completely randomly.
Pair Corralation between Brompton Global and Bloom Select
Assuming the 90 days trading horizon Brompton Global Dividend is expected to generate 0.79 times more return on investment than Bloom Select. However, Brompton Global Dividend is 1.27 times less risky than Bloom Select. It trades about 0.12 of its potential returns per unit of risk. Bloom Select Income is currently generating about 0.03 per unit of risk. If you would invest 1,555 in Brompton Global Dividend on August 31, 2024 and sell it today you would earn a total of 722.00 from holding Brompton Global Dividend or generate 46.43% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 97.49% |
| Values | Daily Returns |
Brompton Global Dividend vs. Bloom Select Income
Performance |
| Timeline |
| Brompton Global Dividend |
| Bloom Select Income |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Weak
Brompton Global and Bloom Select Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Brompton Global and Bloom Select
The main advantage of trading using opposite Brompton Global and Bloom Select positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Brompton Global position performs unexpectedly, Bloom Select 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 Bloom Select will offset losses from the drop in Bloom Select's long position.| Brompton Global vs. Global Healthcare Income | Brompton Global vs. Brompton European Dividend | Brompton Global vs. Forstrong Global Income | Brompton Global vs. iShares Canadian HYBrid |
| Bloom Select vs. Tech Leaders Income | Bloom Select vs. Brompton Global Dividend | Bloom Select vs. Forstrong Global Income | Bloom Select vs. iShares Canadian HYBrid |
Check out your portfolio center.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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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