Correlation Between 26442CAA2 and Bridgford Foods

Can any of the company-specific risk be diversified away by investing in both 26442CAA2 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 26442CAA2 and Bridgford Foods into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between DUKE ENERGY CAROLINAS and Bridgford Foods, you can compare the effects of market volatilities on 26442CAA2 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 26442CAA2 with a short position of Bridgford Foods. Check out your portfolio center. Please also check ongoing floating volatility patterns of 26442CAA2 and Bridgford Foods.

Diversification Opportunities for 26442CAA2 and Bridgford Foods

-0.45

Correlation Coefficient

26442CAA2  Bridgford Foods

Very good diversification

The 3 months correlation between 26442CAA2 and Bridgford is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding DUKE ENERGY CAROLINAS and Bridgford Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bridgford Foods and 26442CAA2 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 DUKE ENERGY CAROLINAS 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 26442CAA2 i.e., 26442CAA2 and Bridgford Foods go up and down completely randomly.

Pair Corralation between 26442CAA2 and Bridgford Foods

Assuming the 90 days trading horizon 26442CAA2 is expected to generate 33.44 times less return on investment than Bridgford Foods. But when comparing it to its historical volatility, DUKE ENERGY CAROLINAS is 1.5 times less risky than Bridgford Foods. It trades about 0.01 of its potential returns per unit of risk. Bridgford Foods is currently generating about 0.25 of returns per unit of risk over similar time horizon. If you would invest  976.00  in Bridgford Foods on October 10, 2024 and sell it today you would earn a total of  104.00  from holding Bridgford Foods or generate 10.66% return on investment over 90 days.

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

DUKE ENERGY CAROLINAS  vs.  Bridgford Foods

DUKE ENERGY CAROLINAS

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days DUKE ENERGY CAROLINAS has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, 26442CAA2 is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Bridgford Foods

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Bridgford Foods are ranked lower than 12 (%) 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 26442CAA2 and Bridgford Foods

The main advantage of trading using opposite 26442CAA2 and Bridgford Foods positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if 26442CAA2 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 DUKE ENERGY CAROLINAS 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.