Correlation Between Bridgford Foods and DaVita HealthCare

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

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

Diversification Opportunities for Bridgford Foods and DaVita HealthCare

0.06

Correlation Coefficient

Bridgford Foods  DaVita HealthCare

Significant diversification

The 3 months correlation between Bridgford and DaVita is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Bridgford Foods and DaVita HealthCare Partners in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DaVita HealthCare and Bridgford Foods 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 Bridgford Foods are associated (or correlated) with DaVita HealthCare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DaVita HealthCare has no effect on the direction of Bridgford Foods i.e., Bridgford Foods and DaVita HealthCare go up and down completely randomly.

Pair Corralation between Bridgford Foods and DaVita HealthCare

Given the investment horizon of 90 days Bridgford Foods is expected to under-perform the DaVita HealthCare. But the stock apears to be less risky and, when comparing its historical volatility, Bridgford Foods is 1.02 times less risky than DaVita HealthCare. The stock trades about 0.0 of its potential returns per unit of risk. The DaVita HealthCare Partners is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  9,425  in DaVita HealthCare Partners on February 11, 2024 and sell it today you would earn a total of  4,327  from holding DaVita HealthCare Partners or generate 45.91% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Bridgford Foods  vs.  DaVita HealthCare Partners

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 rather sound forward indicators, Bridgford Foods is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

DaVita HealthCare

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in DaVita HealthCare Partners are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, DaVita HealthCare sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Bridgford Foods and DaVita HealthCare

The main advantage of trading using opposite Bridgford Foods and DaVita HealthCare positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bridgford Foods position performs unexpectedly, DaVita HealthCare 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 DaVita HealthCare will offset losses from the drop in DaVita HealthCare's long position.

The idea behind Bridgford Foods and DaVita HealthCare Partners 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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.