Correlation Between Western Union and Bridgford Foods
Can any of the company-specific risk be diversified away by investing in both Western Union 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 Western Union and Bridgford Foods into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Western Union Co and Bridgford Foods, you can compare the effects of market volatilities on Western Union 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 Western Union with a short position of Bridgford Foods. Check out your portfolio center. Please also check ongoing floating volatility patterns of Western Union and Bridgford Foods.
Diversification Opportunities for Western Union and Bridgford Foods
0.36 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Western and Bridgford is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Western Union Co and Bridgford Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bridgford Foods and Western Union 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 Western Union Co 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 Western Union i.e., Western Union and Bridgford Foods go up and down completely randomly.
Pair Corralation between Western Union and Bridgford Foods
Allowing for the 90-day total investment horizon Western Union is expected to generate 51.13 times less return on investment than Bridgford Foods. But when comparing it to its historical volatility, Western Union Co is 3.83 times less risky than Bridgford Foods. It trades about 0.0 of its potential returns per unit of risk. Bridgford Foods is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 911.00 in Bridgford Foods on September 4, 2024 and sell it today you would earn a total of 22.00 from holding Bridgford Foods or generate 2.41% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Western Union Co vs. Bridgford Foods
Performance |
| Timeline |
| Western Union |
| Bridgford Foods |
Western Union and Bridgford Foods Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Western Union and Bridgford Foods
The main advantage of trading using opposite Western Union and Bridgford Foods positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Western Union 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.| Western Union vs. Navient Corp | Western Union vs. Green Dot | Western Union vs. Orix Corp Ads | Western Union vs. FirstCash |
| 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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