Correlation Between HEALTHPEAK and Bridgford Foods

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

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

Diversification Opportunities for HEALTHPEAK and Bridgford Foods

-0.59

Correlation Coefficient

HEALTHPEAK  Bridgford Foods

Excellent diversification

The 3 months correlation between HEALTHPEAK and Bridgford is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding HEALTHPEAK PROPERTIES INC and Bridgford Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bridgford Foods and HEALTHPEAK 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 HEALTHPEAK PROPERTIES INC 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 HEALTHPEAK i.e., HEALTHPEAK and Bridgford Foods go up and down completely randomly.

Pair Corralation between HEALTHPEAK and Bridgford Foods

Assuming the 90 days trading horizon HEALTHPEAK PROPERTIES INC is expected to generate 28.0 times more return on investment than Bridgford Foods. However, HEALTHPEAK is 28.0 times more volatile than Bridgford Foods. It trades about 0.06 of its potential returns per unit of risk. Bridgford Foods is currently generating about 0.01 per unit of risk. If you would invest  8,643  in HEALTHPEAK PROPERTIES INC on September 24, 2024 and sell it today you would earn a total of  256.00  from holding HEALTHPEAK PROPERTIES INC or generate 2.96% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	81.17%
Values	Daily Returns

HEALTHPEAK PROPERTIES INC  vs.  Bridgford Foods

HEALTHPEAK PROPERTIES INC

Risk-Adjusted Performance

0 of 100

Very Weak

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

Bridgford Foods

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Bridgford Foods are ranked lower than 7 (%) 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 HEALTHPEAK and Bridgford Foods

The main advantage of trading using opposite HEALTHPEAK and Bridgford Foods positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HEALTHPEAK 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 HEALTHPEAK PROPERTIES INC 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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.