Correlation Between Bridgford Foods and Iris Energy

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

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

Diversification Opportunities for Bridgford Foods and Iris Energy

0.57

Correlation Coefficient

Bridgford Foods  Iris Energy

Very weak diversification

The 3 months correlation between Bridgford and Iris is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Bridgford Foods and Iris Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Iris Energy 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 Iris Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Iris Energy has no effect on the direction of Bridgford Foods i.e., Bridgford Foods and Iris Energy go up and down completely randomly.

Pair Corralation between Bridgford Foods and Iris Energy

Given the investment horizon of 90 days Bridgford Foods is expected to generate 1.8 times less return on investment than Iris Energy. But when comparing it to its historical volatility, Bridgford Foods is 1.95 times less risky than Iris Energy. It trades about 0.03 of its potential returns per unit of risk. Iris Energy is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  1,263  in Iris Energy on September 21, 2024 and sell it today you would lose (121.00) from holding Iris Energy or give up 9.58% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	97.62%
Values	Daily Returns

Bridgford Foods  vs.  Iris Energy

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 exhibited solid returns over the last few months and may actually be approaching a breakup point.

Iris Energy

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Iris Energy are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of very weak technical and fundamental indicators, Iris Energy displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Bridgford Foods and Iris Energy

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

The idea behind Bridgford Foods and Iris Energy 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.

Check out your portfolio center.

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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.