Correlation Between Bridgford Foods and Shake Shack

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

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

Diversification Opportunities for Bridgford Foods and Shake Shack

0.65

Correlation Coefficient

Bridgford Foods  Shake Shack

Poor diversification

The 3 months correlation between Bridgford and Shake is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Bridgford Foods and Shake Shack in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shake Shack 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 Shake Shack. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shake Shack has no effect on the direction of Bridgford Foods i.e., Bridgford Foods and Shake Shack go up and down completely randomly.

Pair Corralation between Bridgford Foods and Shake Shack

Given the investment horizon of 90 days Bridgford Foods is expected to generate 0.44 times more return on investment than Shake Shack. However, Bridgford Foods is 2.25 times less risky than Shake Shack. It trades about -0.13 of its potential returns per unit of risk. Shake Shack is currently generating about -0.14 per unit of risk. If you would invest  1,060  in Bridgford Foods on December 26, 2024 and sell it today you would lose (132.00) from holding Bridgford Foods or give up 12.45% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Bridgford Foods  vs.  Shake Shack

Bridgford Foods

Risk-Adjusted Performance

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 April 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Shake Shack

Risk-Adjusted Performance

Very Weak

Over the last 90 days Shake Shack 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 basic indicators remain quite persistent which may send shares a bit higher in April 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with Bridgford Foods and Shake Shack

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

The idea behind Bridgford Foods and Shake Shack 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.