Correlation Between Microsoft and Bridgford Foods
Can any of the company-specific risk be diversified away by investing in both Microsoft 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 Microsoft and Bridgford Foods into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microsoft and Bridgford Foods, you can compare the effects of market volatilities on Microsoft 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 Microsoft with a short position of Bridgford Foods. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and Bridgford Foods.
Diversification Opportunities for Microsoft and Bridgford Foods
-0.31 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Microsoft and Bridgford is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and Bridgford Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bridgford Foods and Microsoft 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 Microsoft 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 Microsoft i.e., Microsoft and Bridgford Foods go up and down completely randomly.
Pair Corralation between Microsoft and Bridgford Foods
Given the investment horizon of 90 days Microsoft is expected to under-perform the Bridgford Foods. But the stock apears to be less risky and, when comparing its historical volatility, Microsoft is 1.13 times less risky than Bridgford Foods. The stock trades about -0.06 of its potential returns per unit of risk. The Bridgford Foods is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 899.00 in Bridgford Foods on August 26, 2024 and sell it today you would earn a total of 24.00 from holding Bridgford Foods or generate 2.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Microsoft vs. Bridgford Foods
Performance |
| Timeline |
| Microsoft |
| Bridgford Foods |
Microsoft and Bridgford Foods Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microsoft and Bridgford Foods
The main advantage of trading using opposite Microsoft and Bridgford Foods positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft 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.| Microsoft vs. GigaCloud Technology Class | Microsoft vs. Arqit Quantum | Microsoft vs. Cemtrex | Microsoft vs. Rapid7 Inc |
| Bridgford Foods vs. Bellring Brands LLC | Bridgford Foods vs. Ingredion Incorporated | Bridgford Foods vs. Nomad Foods | Bridgford Foods vs. Post Holdings |
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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