Correlation Between Bridgford Foods and Diageo PLC
Can any of the company-specific risk be diversified away by investing in both Bridgford Foods and Diageo PLC 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 Bridgford Foods and Diageo PLC into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bridgford Foods and Diageo PLC ADR, you can compare the effects of market volatilities on Bridgford Foods and Diageo PLC 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 Bridgford Foods with a short position of Diageo PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bridgford Foods and Diageo PLC.
Diversification Opportunities for Bridgford Foods and Diageo PLC
0.06 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Bridgford and Diageo is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Bridgford Foods and Diageo PLC ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Diageo PLC ADR and Bridgford 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 Bridgford Foods are associated (or correlated) with Diageo PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Diageo PLC ADR has no effect on the direction of Bridgford Foods i.e., Bridgford Foods and Diageo PLC go up and down completely randomly.
Pair Corralation between Bridgford Foods and Diageo PLC
Given the investment horizon of 90 days Bridgford Foods is expected to generate 1.92 times more return on investment than Diageo PLC. However, Bridgford Foods is 1.92 times more volatile than Diageo PLC ADR. It trades about -0.01 of its potential returns per unit of risk. Diageo PLC ADR is currently generating about -0.05 per unit of risk. If you would invest 1,253 in Bridgford Foods on September 3, 2024 and sell it today you would lose (346.00) from holding Bridgford Foods or give up 27.61% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 99.19% |
| Values | Daily Returns |
Bridgford Foods vs. Diageo PLC ADR
Performance |
| Timeline |
| Bridgford Foods |
| Diageo PLC ADR |
Bridgford Foods and Diageo PLC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bridgford Foods and Diageo PLC
The main advantage of trading using opposite Bridgford Foods and Diageo PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bridgford Foods position performs unexpectedly, Diageo PLC 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 Diageo PLC will offset losses from the drop in Diageo PLC's long position.| Bridgford Foods vs. Seneca Foods Corp | Bridgford Foods vs. J J Snack | Bridgford Foods vs. Central Garden Pet | Bridgford Foods vs. Central Garden Pet |
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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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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