Correlation Between Richardson Electronics and Bridger Aerospace
Can any of the company-specific risk be diversified away by investing in both Richardson Electronics and Bridger Aerospace 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 Richardson Electronics and Bridger Aerospace into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Richardson Electronics and Bridger Aerospace Group, you can compare the effects of market volatilities on Richardson Electronics and Bridger Aerospace 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 Richardson Electronics with a short position of Bridger Aerospace. Check out your portfolio center. Please also check ongoing floating volatility patterns of Richardson Electronics and Bridger Aerospace.
Diversification Opportunities for Richardson Electronics and Bridger Aerospace
-0.65 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Richardson and Bridger is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding Richardson Electronics and Bridger Aerospace Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bridger Aerospace and Richardson Electronics 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 Richardson Electronics are associated (or correlated) with Bridger Aerospace. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bridger Aerospace has no effect on the direction of Richardson Electronics i.e., Richardson Electronics and Bridger Aerospace go up and down completely randomly.
Pair Corralation between Richardson Electronics and Bridger Aerospace
Given the investment horizon of 90 days Richardson Electronics is expected to under-perform the Bridger Aerospace. But the stock apears to be less risky and, when comparing its historical volatility, Richardson Electronics is 26.76 times less risky than Bridger Aerospace. The stock trades about -0.01 of its potential returns per unit of risk. The Bridger Aerospace Group is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 17.00 in Bridger Aerospace Group on November 27, 2024 and sell it today you would lose (7.00) from holding Bridger Aerospace Group or give up 41.18% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Weak |
Accuracy | 82.59% |
Values | Daily Returns |
Richardson Electronics vs. Bridger Aerospace Group
Performance |
Timeline |
Richardson Electronics |
Bridger Aerospace |
Richardson Electronics and Bridger Aerospace Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Richardson Electronics and Bridger Aerospace
The main advantage of trading using opposite Richardson Electronics and Bridger Aerospace positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Richardson Electronics position performs unexpectedly, Bridger Aerospace 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 Bridger Aerospace will offset losses from the drop in Bridger Aerospace's long position.Richardson Electronics vs. Bel Fuse A | ||
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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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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