Correlation Between Bridgford Foods and Lake Resources

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

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

Diversification Opportunities for Bridgford Foods and Lake Resources

-0.68

Correlation Coefficient

Bridgford Foods  Lake Resources

Excellent diversification

The 3 months correlation between Bridgford and Lake is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding Bridgford Foods and Lake Resources NL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lake Resources NL 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 Lake Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lake Resources NL has no effect on the direction of Bridgford Foods i.e., Bridgford Foods and Lake Resources go up and down completely randomly.

Pair Corralation between Bridgford Foods and Lake Resources

Given the investment horizon of 90 days Bridgford Foods is expected to generate 0.3 times more return on investment than Lake Resources. However, Bridgford Foods is 3.31 times less risky than Lake Resources. It trades about 0.0 of its potential returns per unit of risk. Lake Resources NL is currently generating about -0.02 per unit of risk. If you would invest  1,151  in Bridgford Foods on October 22, 2024 and sell it today you would lose (110.00) from holding Bridgford Foods or give up 9.56% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	98.98%
Values	Daily Returns

Bridgford Foods  vs.  Lake Resources NL

Bridgford Foods

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Bridgford Foods are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak forward indicators, Bridgford Foods exhibited solid returns over the last few months and may actually be approaching a breakup point.

Lake Resources NL

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Lake Resources NL has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's forward-looking signals remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Bridgford Foods and Lake Resources

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

The idea behind Bridgford Foods and Lake Resources NL 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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.