Correlation Between BG Foods and Bridgford Foods
Can any of the company-specific risk be diversified away by investing in both BG Foods and Bridgford Foods 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 BG Foods and Bridgford Foods into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BG Foods and Bridgford Foods, you can compare the effects of market volatilities on BG Foods and Bridgford Foods 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 BG Foods with a short position of Bridgford Foods. Check out your portfolio center. Please also check ongoing floating volatility patterns of BG Foods and Bridgford Foods.
Diversification Opportunities for BG Foods and Bridgford Foods
0.14 | Correlation Coefficient |
Average diversification
The 3 months correlation between BGS and Bridgford is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding BG Foods and Bridgford Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bridgford Foods and BG Foods 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 BG Foods are associated (or correlated) with Bridgford Foods. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bridgford Foods has no effect on the direction of BG Foods i.e., BG Foods and Bridgford Foods go up and down completely randomly.
Pair Corralation between BG Foods and Bridgford Foods
Considering the 90-day investment horizon BG Foods is expected to under-perform the Bridgford Foods. In addition to that, BG Foods is 2.59 times more volatile than Bridgford Foods. It trades about -0.2 of its total potential returns per unit of risk. Bridgford Foods is currently generating about 0.06 per unit of volatility. If you would invest 903.00 in Bridgford Foods on August 28, 2024 and sell it today you would earn a total of 18.00 from holding Bridgford Foods or generate 1.99% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
BG Foods vs. Bridgford Foods
Performance |
| Timeline |
| BG Foods |
| Bridgford Foods |
BG Foods and Bridgford Foods Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BG Foods and Bridgford Foods
The main advantage of trading using opposite BG Foods and Bridgford Foods positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BG Foods position performs unexpectedly, Bridgford Foods 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 Bridgford Foods will offset losses from the drop in Bridgford Foods' long position.The idea behind BG Foods and Bridgford Foods 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.| Bridgford Foods vs. Seneca Foods Corp | Bridgford Foods vs. J J Snack | Bridgford Foods vs. Central Garden Pet | Bridgford Foods vs. Central Garden Pet |
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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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