Correlation Between InfuSystems Holdings and Bridgford Foods

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

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

Diversification Opportunities for InfuSystems Holdings and Bridgford Foods

0.25

Correlation Coefficient

InfuSystems Holdings  Bridgford Foods

Modest diversification

The 3 months correlation between InfuSystems and Bridgford is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding InfuSystems Holdings and Bridgford Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bridgford Foods and InfuSystems Holdings 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 InfuSystems Holdings are associated (or correlated) with Bridgford Foods. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bridgford Foods has no effect on the direction of InfuSystems Holdings i.e., InfuSystems Holdings and Bridgford Foods go up and down completely randomly.

Pair Corralation between InfuSystems Holdings and Bridgford Foods

Given the investment horizon of 90 days InfuSystems Holdings is expected to generate 1.3 times more return on investment than Bridgford Foods. However, InfuSystems Holdings is 1.3 times more volatile than Bridgford Foods. It trades about 0.0 of its potential returns per unit of risk. Bridgford Foods is currently generating about -0.01 per unit of risk. If you would invest  1,077  in InfuSystems Holdings on October 24, 2024 and sell it today you would lose (265.50) from holding InfuSystems Holdings or give up 24.65% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	99.19%
Values	Daily Returns

InfuSystems Holdings  vs.  Bridgford Foods

InfuSystems Holdings

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in InfuSystems Holdings are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady technical and fundamental indicators, InfuSystems Holdings unveiled solid returns over the last few months and may actually be approaching a breakup point.

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.

Pair Trading with InfuSystems Holdings and Bridgford Foods

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

The idea behind InfuSystems Holdings and Bridgford Foods 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.