Correlation Between Citigroup and Bridgford Foods

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

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

Diversification Opportunities for Citigroup and Bridgford Foods

0.34

Correlation Coefficient

Citigroup  Bridgford Foods

Weak diversification

The 3 months correlation between Citigroup and Bridgford is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Bridgford Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bridgford Foods and Citigroup 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 Citigroup 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 Citigroup i.e., Citigroup and Bridgford Foods go up and down completely randomly.

Pair Corralation between Citigroup and Bridgford Foods

Taking into account the 90-day investment horizon Citigroup is expected to generate 0.92 times more return on investment than Bridgford Foods. However, Citigroup is 1.09 times less risky than Bridgford Foods. It trades about 0.16 of its potential returns per unit of risk. Bridgford Foods is currently generating about 0.02 per unit of risk. If you would invest  5,614  in Citigroup on February 1, 2024 and sell it today you would earn a total of  519.00  from holding Citigroup or generate 9.24% return on investment over 90 days.

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

Citigroup  vs.  Bridgford Foods

Citigroup

Risk-Adjusted Performance

10 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Citigroup are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of rather unfluctuating fundamental indicators, Citigroup may actually be approaching a critical reversion point that can send shares even higher in June 2024.

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.

Pair Trading with Citigroup and Bridgford Foods

The main advantage of trading using opposite Citigroup and Bridgford Foods positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup 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 Citigroup 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.