Correlation Between Bloom Select and Capital Group
Can any of the company-specific risk be diversified away by investing in both Bloom Select and Capital Group 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 Capital Group 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 Capital Group Global, you can compare the effects of market volatilities on Bloom Select and Capital Group 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 Capital Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bloom Select and Capital Group.
Diversification Opportunities for Bloom Select and Capital Group
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Bloom and Capital is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Bloom Select Income and Capital Group Global in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Capital Group Global 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 Capital Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Capital Group Global has no effect on the direction of Bloom Select i.e., Bloom Select and Capital Group go up and down completely randomly.
Pair Corralation between Bloom Select and Capital Group
Assuming the 90 days trading horizon Bloom Select is expected to generate 2.49 times less return on investment than Capital Group. In addition to that, Bloom Select is 1.31 times more volatile than Capital Group Global. It trades about 0.04 of its total potential returns per unit of risk. Capital Group Global is currently generating about 0.12 per unit of volatility. If you would invest 4,518 in Capital Group Global on September 2, 2024 and sell it today you would earn a total of 1,575 from holding Capital Group Global or generate 34.86% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 98.36% |
| Values | Daily Returns |
Bloom Select Income vs. Capital Group Global
Performance |
| Timeline |
| Bloom Select Income |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Capital Group Global |
Bloom Select and Capital Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bloom Select and Capital Group
The main advantage of trading using opposite Bloom Select and Capital Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bloom Select position performs unexpectedly, Capital Group 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 Capital Group will offset losses from the drop in Capital Group's long position.| Bloom Select vs. Canadian High Income | Bloom Select vs. Blue Ribbon Income | Bloom Select vs. Energy Income | Bloom Select vs. Australian REIT Income |
| Capital Group vs. Mawer Global Small | Capital Group vs. BMO Concentrated Global | Capital Group vs. CI Global Resource | Capital Group vs. Edgepoint Global Growth |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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