Correlation Between Bridgford Foods and Summit Materials
Can any of the company-specific risk be diversified away by investing in both Bridgford Foods and Summit Materials 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 Summit Materials into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bridgford Foods and Summit Materials, you can compare the effects of market volatilities on Bridgford Foods and Summit Materials 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 Summit Materials. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bridgford Foods and Summit Materials.
Diversification Opportunities for Bridgford Foods and Summit Materials
0.04 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Bridgford and Summit is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Bridgford Foods and Summit Materials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Summit Materials 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 Summit Materials. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Summit Materials has no effect on the direction of Bridgford Foods i.e., Bridgford Foods and Summit Materials go up and down completely randomly.
Pair Corralation between Bridgford Foods and Summit Materials
Given the investment horizon of 90 days Bridgford Foods is expected to generate 0.83 times more return on investment than Summit Materials. However, Bridgford Foods is 1.2 times less risky than Summit Materials. It trades about -0.26 of its potential returns per unit of risk. Summit Materials is currently generating about -0.24 per unit of risk. If you would invest 1,132 in Bridgford Foods on January 25, 2024 and sell it today you would lose (75.00) from holding Bridgford Foods or give up 6.63% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Bridgford Foods vs. Summit Materials
Performance |
Timeline |
Bridgford Foods |
Summit Materials |
Bridgford Foods and Summit Materials Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Bridgford Foods and Summit Materials
The main advantage of trading using opposite Bridgford Foods and Summit Materials positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bridgford Foods position performs unexpectedly, Summit Materials 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 Summit Materials will offset losses from the drop in Summit Materials' long position.Bridgford Foods vs. Bunge Limited | Bridgford Foods vs. Archer Daniels Midland | Bridgford Foods vs. Fresh Del Monte | Bridgford Foods vs. Limoneira Co |
Summit Materials vs. Martin Marietta Materials | Summit Materials vs. Vulcan Materials | Summit Materials vs. United States Lime | Summit Materials vs. James Hardie Industries |
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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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