Correlation Between Montauk Renewables and Bridgford Foods

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

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

Diversification Opportunities for Montauk Renewables and Bridgford Foods

-0.24

Correlation Coefficient

Montauk Renewables  Bridgford Foods

Very good diversification

The 3 months correlation between Montauk and Bridgford is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding Montauk Renewables and Bridgford Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bridgford Foods and Montauk Renewables 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 Montauk Renewables 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 Montauk Renewables i.e., Montauk Renewables and Bridgford Foods go up and down completely randomly.

Pair Corralation between Montauk Renewables and Bridgford Foods

Given the investment horizon of 90 days Montauk Renewables is expected to generate 1.33 times more return on investment than Bridgford Foods. However, Montauk Renewables is 1.33 times more volatile than Bridgford Foods. It trades about -0.01 of its potential returns per unit of risk. Bridgford Foods is currently generating about -0.06 per unit of risk. If you would invest  445.00  in Montauk Renewables on September 5, 2024 and sell it today you would lose (34.00) from holding Montauk Renewables or give up 7.64% of portfolio value over 90 days.

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

Montauk Renewables  vs.  Bridgford Foods

Montauk Renewables

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Montauk Renewables has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, Montauk Renewables is not utilizing all of its potentials. The current stock price mess, may contribute to short-term losses for the institutional investors.

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 latest weak performance, the Stock's forward indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Pair Trading with Montauk Renewables and Bridgford Foods

The main advantage of trading using opposite Montauk Renewables and Bridgford Foods positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Montauk Renewables 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 Montauk Renewables 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.