Correlation Between Sensient Technologies and Bridgford Foods

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

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

Diversification Opportunities for Sensient Technologies and Bridgford Foods

-0.71

Correlation Coefficient

Sensient Technologies  Bridgford Foods

Pay attention - limited upside

The 3 months correlation between Sensient and Bridgford is -0.71. Overlapping area represents the amount of risk that can be diversified away by holding Sensient Technologies and Bridgford Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bridgford Foods and Sensient Technologies 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 Sensient Technologies 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 Sensient Technologies i.e., Sensient Technologies and Bridgford Foods go up and down completely randomly.

Pair Corralation between Sensient Technologies and Bridgford Foods

Considering the 90-day investment horizon Sensient Technologies is expected to generate 10.25 times less return on investment than Bridgford Foods. But when comparing it to its historical volatility, Sensient Technologies is 1.49 times less risky than Bridgford Foods. It trades about 0.0 of its potential returns per unit of risk. Bridgford Foods is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest  1,200  in Bridgford Foods on October 13, 2024 and sell it today you would lose (137.00) from holding Bridgford Foods or give up 11.42% of portfolio value over 90 days.

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

Sensient Technologies  vs.  Bridgford Foods

Sensient Technologies

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sensient Technologies has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in February 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Bridgford Foods

Risk-Adjusted Performance

10 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Bridgford Foods are ranked lower than 10 (%) 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 Sensient Technologies and Bridgford Foods

The main advantage of trading using opposite Sensient Technologies and Bridgford Foods positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sensient Technologies 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 Sensient Technologies 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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.