Correlation Between Bridgford Foods and Aryzta AG

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

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

Diversification Opportunities for Bridgford Foods and Aryzta AG

-0.3

Correlation Coefficient

Bridgford Foods  Aryzta AG

Very good diversification

The 3 months correlation between Bridgford and Aryzta is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding Bridgford Foods and Aryzta AG PK in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aryzta AG PK and Bridgford Foods 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 Bridgford Foods are associated (or correlated) with Aryzta AG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aryzta AG PK has no effect on the direction of Bridgford Foods i.e., Bridgford Foods and Aryzta AG go up and down completely randomly.

Pair Corralation between Bridgford Foods and Aryzta AG

Given the investment horizon of 90 days Bridgford Foods is expected to under-perform the Aryzta AG. But the stock apears to be less risky and, when comparing its historical volatility, Bridgford Foods is 1.32 times less risky than Aryzta AG. The stock trades about -0.03 of its potential returns per unit of risk. The Aryzta AG PK is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  84.00  in Aryzta AG PK on February 26, 2024 and sell it today you would earn a total of  13.00  from holding Aryzta AG PK or generate 15.48% return on investment over 90 days.

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

Bridgford Foods  vs.  Aryzta AG PK

Bridgford Foods

Risk-Adjusted Performance

0 of 100

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 rather sound forward indicators, Bridgford Foods is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Aryzta AG PK

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Aryzta AG PK are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Aryzta AG showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Bridgford Foods and Aryzta AG

The main advantage of trading using opposite Bridgford Foods and Aryzta AG positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bridgford Foods position performs unexpectedly, Aryzta AG 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 Aryzta AG will offset losses from the drop in Aryzta AG's long position.

The idea behind Bridgford Foods and Aryzta AG PK 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.