Correlation Between INGERSOLL and Bridgford Foods

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

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

Diversification Opportunities for INGERSOLL and Bridgford Foods

-0.64

Correlation Coefficient

INGERSOLL  Bridgford Foods

Excellent diversification

The 3 months correlation between INGERSOLL and Bridgford is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding INGERSOLL RAND LUXEMBOURG FINA and Bridgford Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bridgford Foods and INGERSOLL 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 INGERSOLL RAND LUXEMBOURG FINANCE 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 INGERSOLL i.e., INGERSOLL and Bridgford Foods go up and down completely randomly.

Pair Corralation between INGERSOLL and Bridgford Foods

Assuming the 90 days trading horizon INGERSOLL RAND LUXEMBOURG FINANCE is expected to generate 19.14 times more return on investment than Bridgford Foods. However, INGERSOLL is 19.14 times more volatile than Bridgford Foods. It trades about 0.04 of its potential returns per unit of risk. Bridgford Foods is currently generating about -0.01 per unit of risk. If you would invest  9,378  in INGERSOLL RAND LUXEMBOURG FINANCE on September 29, 2024 and sell it today you would earn a total of  306.00  from holding INGERSOLL RAND LUXEMBOURG FINANCE or generate 3.26% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	93.5%
Values	Daily Returns

INGERSOLL RAND LUXEMBOURG FINA  vs.  Bridgford Foods

INGERSOLL RAND LUXEM

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days INGERSOLL RAND LUXEMBOURG FINANCE has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, INGERSOLL 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

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Bridgford Foods are ranked lower than 11 (%) 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 INGERSOLL and Bridgford Foods

The main advantage of trading using opposite INGERSOLL and Bridgford Foods positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if INGERSOLL 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 INGERSOLL RAND LUXEMBOURG FINANCE 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.