Correlation Between Bridgford Foods and Viking Holdings

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

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

Diversification Opportunities for Bridgford Foods and Viking Holdings

0.36

Correlation Coefficient

Bridgford Foods  Viking Holdings

Weak diversification

The 3 months correlation between Bridgford and Viking is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Bridgford Foods and Viking Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Viking Holdings 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 Viking Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Viking Holdings has no effect on the direction of Bridgford Foods i.e., Bridgford Foods and Viking Holdings go up and down completely randomly.

Pair Corralation between Bridgford Foods and Viking Holdings

Given the investment horizon of 90 days Bridgford Foods is expected to generate 62.54 times less return on investment than Viking Holdings. In addition to that, Bridgford Foods is 1.05 times more volatile than Viking Holdings. It trades about 0.0 of its total potential returns per unit of risk. Viking Holdings is currently generating about 0.14 per unit of volatility. If you would invest  2,610  in Viking Holdings on October 11, 2024 and sell it today you would earn a total of  1,695  from holding Viking Holdings or generate 64.94% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	35.57%
Values	Daily Returns

Bridgford Foods  vs.  Viking Holdings

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.

Viking Holdings

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Viking Holdings are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward indicators, Viking Holdings disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Bridgford Foods and Viking Holdings

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

The idea behind Bridgford Foods and Viking Holdings 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.