Correlation Between Bridgford Foods and INGERSOLL

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

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

Diversification Opportunities for Bridgford Foods and INGERSOLL

-0.64

Correlation Coefficient

Bridgford Foods  INGERSOLL

Excellent diversification

The 3 months correlation between Bridgford and INGERSOLL is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding Bridgford Foods and INGERSOLL RAND LUXEMBOURG FINA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on INGERSOLL RAND LUXEM 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 INGERSOLL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of INGERSOLL RAND LUXEM has no effect on the direction of Bridgford Foods i.e., Bridgford Foods and INGERSOLL go up and down completely randomly.

Pair Corralation between Bridgford Foods and INGERSOLL

Given the investment horizon of 90 days Bridgford Foods is expected to under-perform the INGERSOLL. But the stock apears to be less risky and, when comparing its historical volatility, Bridgford Foods is 19.14 times less risky than INGERSOLL. The stock trades about -0.01 of its potential returns per unit of risk. The INGERSOLL RAND LUXEMBOURG FINANCE is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  9,378  in INGERSOLL RAND LUXEMBOURG FINANCE on September 29, 2024 and sell it today you would earn a total of  306.00  from holding INGERSOLL RAND LUXEMBOURG FINANCE or generate 3.26% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	93.5%
Values	Daily Returns

Bridgford Foods  vs.  INGERSOLL RAND LUXEMBOURG FINA

Bridgford Foods

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Bridgford Foods are ranked lower than 11 (%) 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.

INGERSOLL RAND LUXEM

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days INGERSOLL RAND LUXEMBOURG FINANCE has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, INGERSOLL is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Bridgford Foods and INGERSOLL

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

The idea behind Bridgford Foods and INGERSOLL RAND LUXEMBOURG FINANCE 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.