Correlation Between SL Green and Bridgford Foods

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

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

Diversification Opportunities for SL Green and Bridgford Foods

-0.02

Correlation Coefficient

SL Green  Bridgford Foods

Good diversification

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

Pair Corralation between SL Green and Bridgford Foods

Considering the 90-day investment horizon SL Green Realty is expected to generate 0.8 times more return on investment than Bridgford Foods. However, SL Green Realty is 1.25 times less risky than Bridgford Foods. It trades about 0.1 of its potential returns per unit of risk. Bridgford Foods is currently generating about 0.01 per unit of risk. If you would invest  4,532  in SL Green Realty on September 20, 2024 and sell it today you would earn a total of  2,879  from holding SL Green Realty or generate 63.53% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.79%
Values	Daily Returns

SL Green Realty  vs.  Bridgford Foods

SL Green Realty

Risk-Adjusted Performance

3 of 100

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in SL Green Realty are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable essential indicators, SL Green is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Bridgford Foods

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Bridgford Foods are ranked lower than 5 (%) 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 January 2025.

Pair Trading with SL Green and Bridgford Foods

The main advantage of trading using opposite SL Green and Bridgford Foods positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SL Green 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 SL Green Realty 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.