Correlation Between Bridgford Foods and Limoneira

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

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

Diversification Opportunities for Bridgford Foods and Limoneira

-0.56

Correlation Coefficient

Bridgford Foods  Limoneira

Excellent diversification

The 3 months correlation between Bridgford and Limoneira is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding Bridgford Foods and Limoneira Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Limoneira 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 Limoneira. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Limoneira has no effect on the direction of Bridgford Foods i.e., Bridgford Foods and Limoneira go up and down completely randomly.

Pair Corralation between Bridgford Foods and Limoneira

Given the investment horizon of 90 days Bridgford Foods is expected to generate 0.9 times more return on investment than Limoneira. However, Bridgford Foods is 1.1 times less risky than Limoneira. It trades about 0.12 of its potential returns per unit of risk. Limoneira Co is currently generating about -0.15 per unit of risk. If you would invest  907.00  in Bridgford Foods on November 28, 2024 and sell it today you would earn a total of  111.00  from holding Bridgford Foods or generate 12.24% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Bridgford Foods  vs.  Limoneira Co

Bridgford Foods

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Bridgford Foods are ranked lower than 9 (%) 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.

Limoneira

Risk-Adjusted Performance

Very Weak

Over the last 90 days Limoneira Co has generated negative risk-adjusted returns adding no value to investors with long positions. Even with unsteady performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in March 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with Bridgford Foods and Limoneira

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

The idea behind Bridgford Foods and Limoneira Co 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 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.