Correlation Between Seneca Foods and Bridgford Foods

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

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

Diversification Opportunities for Seneca Foods and Bridgford Foods

-0.02

Correlation Coefficient

Seneca Foods  Bridgford Foods

Good diversification

The 3 months correlation between Seneca and Bridgford is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding Seneca Foods Corp and Bridgford Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bridgford Foods and Seneca 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 Seneca Foods Corp 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 Seneca Foods i.e., Seneca Foods and Bridgford Foods go up and down completely randomly.

Pair Corralation between Seneca Foods and Bridgford Foods

Assuming the 90 days horizon Seneca Foods Corp is expected to generate 2.33 times more return on investment than Bridgford Foods. However, Seneca Foods is 2.33 times more volatile than Bridgford Foods. It trades about 0.15 of its potential returns per unit of risk. Bridgford Foods is currently generating about 0.11 per unit of risk. If you would invest  7,204  in Seneca Foods Corp on November 27, 2024 and sell it today you would earn a total of  856.00  from holding Seneca Foods Corp or generate 11.88% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	33.9%
Values	Daily Returns

Seneca Foods Corp  vs.  Bridgford Foods

Seneca Foods Corp

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Seneca Foods Corp are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unsteady technical and fundamental indicators, Seneca Foods sustained solid returns over the last few months and may actually be approaching a breakup point.

Bridgford Foods

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Bridgford Foods are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak forward indicators, Bridgford Foods may actually be approaching a critical reversion point that can send shares even higher in March 2025.

Pair Trading with Seneca Foods and Bridgford Foods

The main advantage of trading using opposite Seneca Foods and Bridgford Foods positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Seneca Foods 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 Seneca Foods Corp 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.