Correlation Between Bridgford Foods and Limoneira
Can any of the company-specific risk be diversified away by investing in both Bridgford Foods and Limoneira 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 Limoneira into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bridgford Foods and Limoneira Co, you can compare the effects of market volatilities on Bridgford Foods and Limoneira 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 Limoneira. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bridgford Foods and Limoneira.
Diversification Opportunities for Bridgford Foods and Limoneira
-0.5 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Bridgford and Limoneira is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding Bridgford Foods and Limoneira Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Limoneira 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 Limoneira. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Limoneira has no effect on the direction of Bridgford Foods i.e., Bridgford Foods and Limoneira go up and down completely randomly.
Pair Corralation between Bridgford Foods and Limoneira
Given the investment horizon of 90 days Bridgford Foods is expected to generate 2.24 times less return on investment than Limoneira. But when comparing it to its historical volatility, Bridgford Foods is 1.36 times less risky than Limoneira. It trades about 0.07 of its potential returns per unit of risk. Limoneira Co is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 2,633 in Limoneira Co on August 29, 2024 and sell it today you would earn a total of 157.00 from holding Limoneira Co or generate 5.96% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bridgford Foods vs. Limoneira Co
Performance |
| Timeline |
| Bridgford Foods |
| Limoneira |
Bridgford Foods and Limoneira Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bridgford Foods and Limoneira
The main advantage of trading using opposite Bridgford Foods and Limoneira positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bridgford Foods position performs unexpectedly, Limoneira 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 Limoneira will offset losses from the drop in Limoneira's long position.| Bridgford Foods vs. Seneca Foods Corp | Bridgford Foods vs. Central Garden Pet | Bridgford Foods vs. Central Garden Pet | Bridgford Foods vs. Lancaster Colony |
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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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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