Correlation Between Bridgford Foods and BBB Foods
Can any of the company-specific risk be diversified away by investing in both Bridgford Foods and BBB Foods 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 BBB Foods into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bridgford Foods and BBB Foods, you can compare the effects of market volatilities on Bridgford Foods and BBB Foods 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 BBB Foods. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bridgford Foods and BBB Foods.
Diversification Opportunities for Bridgford Foods and BBB Foods
-0.16 | Correlation Coefficient |
Good diversification
The 3 months correlation between Bridgford and BBB is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding Bridgford Foods and BBB Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BBB Foods 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 BBB Foods. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BBB Foods has no effect on the direction of Bridgford Foods i.e., Bridgford Foods and BBB Foods go up and down completely randomly.
Pair Corralation between Bridgford Foods and BBB Foods
Given the investment horizon of 90 days Bridgford Foods is expected to generate 19.82 times less return on investment than BBB Foods. In addition to that, Bridgford Foods is 1.05 times more volatile than BBB Foods. It trades about 0.01 of its total potential returns per unit of risk. BBB Foods is currently generating about 0.17 per unit of volatility. If you would invest 3,000 in BBB Foods on August 28, 2024 and sell it today you would earn a total of 416.00 from holding BBB Foods or generate 13.87% 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. BBB Foods
Performance |
| Timeline |
| Bridgford Foods |
| BBB Foods |
Bridgford Foods and BBB Foods Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bridgford Foods and BBB Foods
The main advantage of trading using opposite Bridgford Foods and BBB Foods positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bridgford Foods position performs unexpectedly, BBB Foods 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 BBB Foods will offset losses from the drop in BBB Foods' 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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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