Correlation Between AMCON Distributing and Bridgford Foods

Can any of the company-specific risk be diversified away by investing in both AMCON Distributing 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 AMCON Distributing and Bridgford Foods into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between AMCON Distributing and Bridgford Foods, you can compare the effects of market volatilities on AMCON Distributing 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 AMCON Distributing with a short position of Bridgford Foods. Check out your portfolio center. Please also check ongoing floating volatility patterns of AMCON Distributing and Bridgford Foods.

Diversification Opportunities for AMCON Distributing and Bridgford Foods

0.05

Correlation Coefficient

AMCON Distributing  Bridgford Foods

Significant diversification

The 3 months correlation between AMCON and Bridgford is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding AMCON Distributing and Bridgford Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bridgford Foods and AMCON Distributing 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 AMCON Distributing 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 AMCON Distributing i.e., AMCON Distributing and Bridgford Foods go up and down completely randomly.

Pair Corralation between AMCON Distributing and Bridgford Foods

Considering the 90-day investment horizon AMCON Distributing is expected to generate 1.82 times more return on investment than Bridgford Foods. However, AMCON Distributing is 1.82 times more volatile than Bridgford Foods. It trades about -0.01 of its potential returns per unit of risk. Bridgford Foods is currently generating about -0.03 per unit of risk. If you would invest  18,998  in AMCON Distributing on February 5, 2024 and sell it today you would lose (3,208) from holding AMCON Distributing or give up 16.89% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	99.26%
Values	Daily Returns

AMCON Distributing  vs.  Bridgford Foods

AMCON Distributing

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days AMCON Distributing has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's forward indicators remain comparatively stable which may send shares a bit higher in June 2024. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Bridgford Foods

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Bridgford Foods has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's forward indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Pair Trading with AMCON Distributing and Bridgford Foods

The main advantage of trading using opposite AMCON Distributing and Bridgford Foods positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AMCON Distributing 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.

The idea behind AMCON Distributing and Bridgford Foods pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.