Correlation Between Bridgford Foods and Summit Midstream

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

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

Diversification Opportunities for Bridgford Foods and Summit Midstream

-0.15

Correlation Coefficient

Bridgford Foods  Summit Midstream

Good diversification

The 3 months correlation between Bridgford and Summit is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding Bridgford Foods and Summit Midstream in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Summit Midstream 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 Summit Midstream. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Summit Midstream has no effect on the direction of Bridgford Foods i.e., Bridgford Foods and Summit Midstream go up and down completely randomly.

Pair Corralation between Bridgford Foods and Summit Midstream

Given the investment horizon of 90 days Bridgford Foods is expected to under-perform the Summit Midstream. But the stock apears to be less risky and, when comparing its historical volatility, Bridgford Foods is 1.62 times less risky than Summit Midstream. The stock trades about -0.11 of its potential returns per unit of risk. The Summit Midstream is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  3,634  in Summit Midstream on December 25, 2024 and sell it today you would lose (14.00) from holding Summit Midstream or give up 0.39% of portfolio value over 90 days.

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

Bridgford Foods  vs.  Summit Midstream

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 latest weak performance, the Stock's forward indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Summit Midstream

Risk-Adjusted Performance

Weak

Over the last 90 days Summit Midstream has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound primary indicators, Summit Midstream is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Bridgford Foods and Summit Midstream

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

The idea behind Bridgford Foods and Summit Midstream 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.