Correlation Between Dow Jones and Bridgford Foods
Can any of the company-specific risk be diversified away by investing in both Dow Jones and Bridgford 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 Dow Jones and Bridgford Foods into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dow Jones Industrial and Bridgford Foods, you can compare the effects of market volatilities on Dow Jones and Bridgford 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 Dow Jones with a short position of Bridgford Foods. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and Bridgford Foods.
Diversification Opportunities for Dow Jones and Bridgford Foods
-0.41 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Dow and Bridgford is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and Bridgford Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bridgford Foods and Dow Jones 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 Dow Jones Industrial are associated (or correlated) with Bridgford Foods. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bridgford Foods has no effect on the direction of Dow Jones i.e., Dow Jones and Bridgford Foods go up and down completely randomly.
Pair Corralation between Dow Jones and Bridgford Foods
Assuming the 90 days trading horizon Dow Jones Industrial is expected to generate 0.28 times more return on investment than Bridgford Foods. However, Dow Jones Industrial is 3.55 times less risky than Bridgford Foods. It trades about 0.08 of its potential returns per unit of risk. Bridgford Foods is currently generating about -0.01 per unit of risk. If you would invest 3,347,646 in Dow Jones Industrial on August 30, 2024 and sell it today you would earn a total of 1,124,560 from holding Dow Jones Industrial or generate 33.59% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 99.19% |
| Values | Daily Returns |
Dow Jones Industrial vs. Bridgford Foods
Performance |
| Timeline |
Dow Jones and Bridgford Foods Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
Bridgford Foods
Pair trading matchups for Bridgford Foods
Pair Trading with Dow Jones and Bridgford Foods
The main advantage of trading using opposite Dow Jones and Bridgford Foods positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones position performs unexpectedly, Bridgford 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 Bridgford Foods will offset losses from the drop in Bridgford Foods' long position.| Dow Jones vs. Kaltura | Dow Jones vs. Artisan Partners Asset | Dow Jones vs. US Global Investors | Dow Jones vs. Analog Devices |
| Bridgford Foods vs. Seneca Foods Corp | Bridgford Foods vs. Central Garden Pet | Bridgford Foods vs. Central Garden Pet | Bridgford Foods vs. Lancaster Colony |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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