Correlation Between Bridgford Foods and United Natural
Can any of the company-specific risk be diversified away by investing in both Bridgford Foods and United Natural 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 United Natural into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bridgford Foods and United Natural Foods, you can compare the effects of market volatilities on Bridgford Foods and United Natural 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 United Natural. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bridgford Foods and United Natural.
Diversification Opportunities for Bridgford Foods and United Natural
0.91 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Bridgford and United is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Bridgford Foods and United Natural Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on United Natural 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 United Natural. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of United Natural Foods has no effect on the direction of Bridgford Foods i.e., Bridgford Foods and United Natural go up and down completely randomly.
Pair Corralation between Bridgford Foods and United Natural
Given the investment horizon of 90 days Bridgford Foods is expected to under-perform the United Natural. But the stock apears to be less risky and, when comparing its historical volatility, Bridgford Foods is 1.33 times less risky than United Natural. The stock trades about -0.09 of its potential returns per unit of risk. The United Natural Foods is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest 2,759 in United Natural Foods on November 3, 2024 and sell it today you would earn a total of 215.00 from holding United Natural Foods or generate 7.79% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bridgford Foods vs. United Natural Foods
Performance |
| Timeline |
| Bridgford Foods |
| United Natural Foods |
Bridgford Foods and United Natural Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bridgford Foods and United Natural
The main advantage of trading using opposite Bridgford Foods and United Natural positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bridgford Foods position performs unexpectedly, United Natural 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 United Natural will offset losses from the drop in United Natural's long position.| Bridgford Foods vs. J J Snack | 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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