Correlation Between Titan Machinery and Bridgford Foods

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

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

Diversification Opportunities for Titan Machinery and Bridgford Foods

-0.36

Correlation Coefficient

Titan Machinery  Bridgford Foods

Very good diversification

The 3 months correlation between Titan and Bridgford is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Titan Machinery and Bridgford Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bridgford Foods and Titan Machinery 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 Titan Machinery 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 Titan Machinery i.e., Titan Machinery and Bridgford Foods go up and down completely randomly.

Pair Corralation between Titan Machinery and Bridgford Foods

Given the investment horizon of 90 days Titan Machinery is expected to generate 2.15 times more return on investment than Bridgford Foods. However, Titan Machinery is 2.15 times more volatile than Bridgford Foods. It trades about 0.13 of its potential returns per unit of risk. Bridgford Foods is currently generating about -0.22 per unit of risk. If you would invest  1,382  in Titan Machinery on December 28, 2024 and sell it today you would earn a total of  408.00  from holding Titan Machinery or generate 29.52% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Titan Machinery  vs.  Bridgford Foods

Titan Machinery

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Titan Machinery are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of very unsteady basic indicators, Titan Machinery displayed solid returns over the last few months and may actually be approaching a breakup point.

Bridgford Foods

Risk-Adjusted Performance

Very Weak

Over the last 90 days Bridgford Foods has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of conflicting performance in the last few months, the Stock's forward indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Titan Machinery and Bridgford Foods

The main advantage of trading using opposite Titan Machinery and Bridgford Foods positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Titan Machinery 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 Titan Machinery 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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.