Correlation Between Bridgford Foods and McCormick Company
Can any of the company-specific risk be diversified away by investing in both Bridgford Foods and McCormick Company 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 McCormick Company into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bridgford Foods and McCormick Company Incorporated, you can compare the effects of market volatilities on Bridgford Foods and McCormick Company 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 McCormick Company. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bridgford Foods and McCormick Company.
Diversification Opportunities for Bridgford Foods and McCormick Company
0.09 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Bridgford and McCormick is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding Bridgford Foods and McCormick Company Incorporated in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on McCormick Company 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 McCormick Company. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of McCormick Company has no effect on the direction of Bridgford Foods i.e., Bridgford Foods and McCormick Company go up and down completely randomly.
Pair Corralation between Bridgford Foods and McCormick Company
Given the investment horizon of 90 days Bridgford Foods is expected to generate 1.62 times more return on investment than McCormick Company. However, Bridgford Foods is 1.62 times more volatile than McCormick Company Incorporated. It trades about 0.04 of its potential returns per unit of risk. McCormick Company Incorporated is currently generating about 0.02 per unit of risk. If you would invest 895.00 in Bridgford Foods on August 31, 2024 and sell it today you would earn a total of 11.00 from holding Bridgford Foods or generate 1.23% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bridgford Foods vs. McCormick Company Incorporated
Performance |
| Timeline |
| Bridgford Foods |
| McCormick Company |
Bridgford Foods and McCormick Company Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bridgford Foods and McCormick Company
The main advantage of trading using opposite Bridgford Foods and McCormick Company positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bridgford Foods position performs unexpectedly, McCormick Company 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 McCormick Company will offset losses from the drop in McCormick Company'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 |
| McCormick Company vs. Central Garden Pet | McCormick Company vs. Seneca Foods Corp | McCormick Company vs. Natures Sunshine Products | McCormick Company vs. Seneca Foods Corp |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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