Correlation Between Bridgford Foods and Haverty Furniture

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

By analyzing existing cross correlation between Bridgford Foods and Haverty Furniture Companies, you can compare the effects of market volatilities on Bridgford Foods and Haverty Furniture 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 Haverty Furniture. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bridgford Foods and Haverty Furniture.

Diversification Opportunities for Bridgford Foods and Haverty Furniture

-0.09

Correlation Coefficient

Bridgford Foods  Haverty Furniture

Good diversification

The 3 months correlation between Bridgford and Haverty is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding Bridgford Foods and Haverty Furniture Companies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Haverty Furniture 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 Haverty Furniture. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Haverty Furniture has no effect on the direction of Bridgford Foods i.e., Bridgford Foods and Haverty Furniture go up and down completely randomly.

Pair Corralation between Bridgford Foods and Haverty Furniture

Given the investment horizon of 90 days Bridgford Foods is expected to generate 1.22 times more return on investment than Haverty Furniture. However, Bridgford Foods is 1.22 times more volatile than Haverty Furniture Companies. It trades about 0.01 of its potential returns per unit of risk. Haverty Furniture Companies is currently generating about -0.06 per unit of risk. If you would invest  1,080  in Bridgford Foods on September 20, 2024 and sell it today you would lose (48.00) from holding Bridgford Foods or give up 4.44% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.79%
Values	Daily Returns

Bridgford Foods  vs.  Haverty Furniture Companies

Bridgford Foods

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Bridgford Foods are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak forward indicators, Bridgford Foods may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Haverty Furniture

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Haverty Furniture Companies has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Bridgford Foods and Haverty Furniture

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

The idea behind Bridgford Foods and Haverty Furniture Companies 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.

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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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.