Correlation Between Bridgford Foods and Nature Wood

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

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

Diversification Opportunities for Bridgford Foods and Nature Wood

0.26

Correlation Coefficient

Bridgford Foods  Nature Wood

Modest diversification

The 3 months correlation between Bridgford and Nature is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Bridgford Foods and Nature Wood Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nature Wood Group 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 Nature Wood. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nature Wood Group has no effect on the direction of Bridgford Foods i.e., Bridgford Foods and Nature Wood go up and down completely randomly.

Pair Corralation between Bridgford Foods and Nature Wood

Given the investment horizon of 90 days Bridgford Foods is expected to generate 0.35 times more return on investment than Nature Wood. However, Bridgford Foods is 2.89 times less risky than Nature Wood. It trades about -0.02 of its potential returns per unit of risk. Nature Wood Group is currently generating about -0.04 per unit of risk. If you would invest  1,312  in Bridgford Foods on September 3, 2024 and sell it today you would lose (379.00) from holding Bridgford Foods or give up 28.89% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	65.61%
Values	Daily Returns

Bridgford Foods  vs.  Nature Wood Group

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 weak performance in the last few months, the Stock's forward indicators remain rather sound which may send shares a bit higher in January 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Nature Wood Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Nature Wood Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent technical and fundamental indicators, Nature Wood is not utilizing all of its potentials. The current stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Bridgford Foods and Nature Wood

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

The idea behind Bridgford Foods and Nature Wood Group 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 Commodity Directory module to find actively traded commodities issued by global exchanges.