Correlation Between Valvoline and Bridgford Foods
Can any of the company-specific risk be diversified away by investing in both Valvoline 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 Valvoline and Bridgford Foods into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Valvoline and Bridgford Foods, you can compare the effects of market volatilities on Valvoline 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 Valvoline with a short position of Bridgford Foods. Check out your portfolio center. Please also check ongoing floating volatility patterns of Valvoline and Bridgford Foods.
Diversification Opportunities for Valvoline and Bridgford Foods
0.11 | Correlation Coefficient |
Average diversification
The 3 months correlation between Valvoline and Bridgford is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding Valvoline and Bridgford Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bridgford Foods and Valvoline 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 Valvoline 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 Valvoline i.e., Valvoline and Bridgford Foods go up and down completely randomly.
Pair Corralation between Valvoline and Bridgford Foods
Considering the 90-day investment horizon Valvoline is expected to under-perform the Bridgford Foods. In addition to that, Valvoline is 1.29 times more volatile than Bridgford Foods. It trades about -0.02 of its total potential returns per unit of risk. Bridgford Foods is currently generating about 0.05 per unit of volatility. If you would invest 892.00 in Bridgford Foods on September 2, 2024 and sell it today you would earn a total of 15.00 from holding Bridgford Foods or generate 1.68% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Valvoline vs. Bridgford Foods
Performance |
| Timeline |
| Valvoline |
| Bridgford Foods |
Valvoline and Bridgford Foods Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Valvoline and Bridgford Foods
The main advantage of trading using opposite Valvoline and Bridgford Foods positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Valvoline 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.| Valvoline vs. Cosan SA ADR | Valvoline vs. Delek Energy | Valvoline vs. Crossamerica Partners LP | Valvoline vs. Par Pacific Holdings |
| Bridgford Foods vs. Seneca Foods Corp | Bridgford Foods vs. J J Snack | Bridgford Foods vs. Central Garden Pet | Bridgford Foods vs. Central Garden Pet |
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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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