Correlation Between Bridgford Foods and Lotus Technology
Can any of the company-specific risk be diversified away by investing in both Bridgford Foods and Lotus Technology 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 Lotus Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bridgford Foods and Lotus Technology Warrants, you can compare the effects of market volatilities on Bridgford Foods and Lotus Technology 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 Lotus Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bridgford Foods and Lotus Technology.
Diversification Opportunities for Bridgford Foods and Lotus Technology
0.05 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Bridgford and Lotus is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Bridgford Foods and Lotus Technology Warrants in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lotus Technology Warrants 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 Lotus Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lotus Technology Warrants has no effect on the direction of Bridgford Foods i.e., Bridgford Foods and Lotus Technology go up and down completely randomly.
Pair Corralation between Bridgford Foods and Lotus Technology
Given the investment horizon of 90 days Bridgford Foods is expected to under-perform the Lotus Technology. But the stock apears to be less risky and, when comparing its historical volatility, Bridgford Foods is 5.11 times less risky than Lotus Technology. The stock trades about -0.01 of its potential returns per unit of risk. The Lotus Technology Warrants is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 72.00 in Lotus Technology Warrants on August 28, 2024 and sell it today you would lose (44.00) from holding Lotus Technology Warrants or give up 61.11% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 72.33% |
| Values | Daily Returns |
Bridgford Foods vs. Lotus Technology Warrants
Performance |
| Timeline |
| Bridgford Foods |
| Lotus Technology Warrants |
Bridgford Foods and Lotus Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bridgford Foods and Lotus Technology
The main advantage of trading using opposite Bridgford Foods and Lotus Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bridgford Foods position performs unexpectedly, Lotus Technology 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 Lotus Technology will offset losses from the drop in Lotus Technology'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 |
| Lotus Technology vs. Bright Scholar Education | Lotus Technology vs. Relx PLC ADR | Lotus Technology vs. Daily Journal Corp | Lotus Technology vs. Pearson PLC ADR |
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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