Correlation Between Limoneira and Bridgford Foods

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

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

Diversification Opportunities for Limoneira and Bridgford Foods

-0.46

Correlation Coefficient

Limoneira  Bridgford Foods

Very good diversification

The 3 months correlation between Limoneira and Bridgford is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding Limoneira Co and Bridgford Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bridgford Foods and Limoneira 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 Limoneira Co 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 Limoneira i.e., Limoneira and Bridgford Foods go up and down completely randomly.

Pair Corralation between Limoneira and Bridgford Foods

Given the investment horizon of 90 days Limoneira Co is expected to generate 0.63 times more return on investment than Bridgford Foods. However, Limoneira Co is 1.59 times less risky than Bridgford Foods. It trades about 0.12 of its potential returns per unit of risk. Bridgford Foods is currently generating about -0.15 per unit of risk. If you would invest  2,411  in Limoneira Co on September 1, 2024 and sell it today you would earn a total of  369.00  from holding Limoneira Co or generate 15.3% return on investment over 90 days.

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

Limoneira Co  vs.  Bridgford Foods

Limoneira

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Limoneira Co are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Even with relatively unsteady basic indicators, Limoneira reported solid returns over the last few months and may actually be approaching a breakup point.

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 weak performance in the last few months, the Stock's forward indicators remain rather sound which may send shares a bit higher in December 2024. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Limoneira and Bridgford Foods

The main advantage of trading using opposite Limoneira and Bridgford Foods positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Limoneira 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 Limoneira Co 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.

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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.