Correlation Between Bridgford Foods and Sensient Technologies
Can any of the company-specific risk be diversified away by investing in both Bridgford Foods and Sensient Technologies 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 Sensient Technologies into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bridgford Foods and Sensient Technologies, you can compare the effects of market volatilities on Bridgford Foods and Sensient Technologies 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 Sensient Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bridgford Foods and Sensient Technologies.
Diversification Opportunities for Bridgford Foods and Sensient Technologies
-0.17 | Correlation Coefficient |
Good diversification
The 3 months correlation between Bridgford and Sensient is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding Bridgford Foods and Sensient Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sensient Technologies 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 Sensient Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sensient Technologies has no effect on the direction of Bridgford Foods i.e., Bridgford Foods and Sensient Technologies go up and down completely randomly.
Pair Corralation between Bridgford Foods and Sensient Technologies
Given the investment horizon of 90 days Bridgford Foods is expected to generate 2.04 times less return on investment than Sensient Technologies. In addition to that, Bridgford Foods is 1.05 times more volatile than Sensient Technologies. It trades about 0.04 of its total potential returns per unit of risk. Sensient Technologies is currently generating about 0.1 per unit of volatility. If you would invest 7,507 in Sensient Technologies on September 1, 2024 and sell it today you would earn a total of 257.00 from holding Sensient Technologies or generate 3.42% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bridgford Foods vs. Sensient Technologies
Performance |
| Timeline |
| Bridgford Foods |
| Sensient Technologies |
Bridgford Foods and Sensient Technologies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bridgford Foods and Sensient Technologies
The main advantage of trading using opposite Bridgford Foods and Sensient Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bridgford Foods position performs unexpectedly, Sensient Technologies 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 Sensient Technologies will offset losses from the drop in Sensient Technologies' 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 |
| Sensient Technologies vs. Innospec | Sensient Technologies vs. Minerals Technologies | Sensient Technologies vs. Oil Dri | Sensient Technologies vs. H B Fuller |
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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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