Correlation Between Bridgford Foods and Eldorado Gold

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

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

Diversification Opportunities for Bridgford Foods and Eldorado Gold

-0.01

Correlation Coefficient

Bridgford Foods  Eldorado Gold

Good diversification

The 3 months correlation between Bridgford and Eldorado is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding Bridgford Foods and Eldorado Gold Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eldorado Gold Corp 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 Eldorado Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eldorado Gold Corp has no effect on the direction of Bridgford Foods i.e., Bridgford Foods and Eldorado Gold go up and down completely randomly.

Pair Corralation between Bridgford Foods and Eldorado Gold

Given the investment horizon of 90 days Bridgford Foods is expected to generate 0.83 times more return on investment than Eldorado Gold. However, Bridgford Foods is 1.2 times less risky than Eldorado Gold. It trades about 0.12 of its potential returns per unit of risk. Eldorado Gold Corp is currently generating about -0.02 per unit of risk. If you would invest  890.00  in Bridgford Foods on September 13, 2024 and sell it today you would earn a total of  138.00  from holding Bridgford Foods or generate 15.51% 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.  Eldorado Gold Corp

Bridgford Foods

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Bridgford Foods are ranked lower than 9 (%) 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.

Eldorado Gold Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Eldorado Gold Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy technical and fundamental indicators, Eldorado Gold is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Bridgford Foods and Eldorado Gold

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

The idea behind Bridgford Foods and Eldorado Gold Corp 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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.