Correlation Between Sensient Technologies and Bridger Aerospace
Can any of the company-specific risk be diversified away by investing in both Sensient Technologies 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 Sensient Technologies and Bridger Aerospace into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sensient Technologies and Bridger Aerospace Group, you can compare the effects of market volatilities on Sensient Technologies 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 Sensient Technologies with a short position of Bridger Aerospace. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sensient Technologies and Bridger Aerospace.
Diversification Opportunities for Sensient Technologies and Bridger Aerospace
-0.17 | Correlation Coefficient |
Good diversification
The 3 months correlation between Sensient and Bridger is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding Sensient Technologies and Bridger Aerospace Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bridger Aerospace and Sensient Technologies 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 Sensient Technologies 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 Sensient Technologies i.e., Sensient Technologies and Bridger Aerospace go up and down completely randomly.
Pair Corralation between Sensient Technologies and Bridger Aerospace
Considering the 90-day investment horizon Sensient Technologies is expected to generate 3.38 times less return on investment than Bridger Aerospace. But when comparing it to its historical volatility, Sensient Technologies is 10.88 times less risky than Bridger Aerospace. It trades about 0.31 of its potential returns per unit of risk. Bridger Aerospace Group is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 15.00 in Bridger Aerospace Group on November 9, 2024 and sell it today you would earn a total of 1.00 from holding Bridger Aerospace Group or generate 6.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sensient Technologies vs. Bridger Aerospace Group
Performance |
| Timeline |
| Sensient Technologies |
| Bridger Aerospace |
Sensient Technologies and Bridger Aerospace Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sensient Technologies and Bridger Aerospace
The main advantage of trading using opposite Sensient Technologies and Bridger Aerospace positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sensient Technologies 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.| Sensient Technologies vs. Innospec | Sensient Technologies vs. Minerals Technologies | Sensient Technologies vs. Oil Dri | Sensient Technologies vs. H B Fuller |
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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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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