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

-0.18

Correlation Coefficient

Titan Machinery  Bridgford Foods

Good diversification

The 3 months correlation between Titan and Bridgford is -0.18. 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 2.63 times less return on investment than Bridgford Foods. In addition to that, Titan Machinery is 1.85 times more volatile than Bridgford Foods. It trades about 0.02 of its total potential returns per unit of risk. Bridgford Foods is currently generating about 0.09 per unit of volatility. If you would invest  969.00  in Bridgford Foods on December 5, 2024 and sell it today you would earn a total of  86.00  from holding Bridgford Foods or generate 8.88% 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

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Titan Machinery are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Titan Machinery is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Bridgford Foods

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Bridgford Foods are ranked lower than 6 (%) 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 April 2025.

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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.