Correlation Between Bridger Aerospace and Littelfuse

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

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

Diversification Opportunities for Bridger Aerospace and Littelfuse

0.26

Correlation Coefficient

Bridger Aerospace  Littelfuse

Modest diversification

The 3 months correlation between Bridger and Littelfuse is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Bridger Aerospace Group and Littelfuse in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Littelfuse and Bridger Aerospace 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 Bridger Aerospace Group are associated (or correlated) with Littelfuse. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Littelfuse has no effect on the direction of Bridger Aerospace i.e., Bridger Aerospace and Littelfuse go up and down completely randomly.

Pair Corralation between Bridger Aerospace and Littelfuse

Assuming the 90 days horizon Bridger Aerospace Group is expected to generate 9.9 times more return on investment than Littelfuse. However, Bridger Aerospace is 9.9 times more volatile than Littelfuse. It trades about 0.08 of its potential returns per unit of risk. Littelfuse is currently generating about -0.12 per unit of risk. If you would invest  4.72  in Bridger Aerospace Group on December 30, 2024 and sell it today you would earn a total of  0.34  from holding Bridger Aerospace Group or generate 7.2% return on investment over 90 days.

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

Bridger Aerospace Group  vs.  Littelfuse

Bridger Aerospace

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Bridger Aerospace Group are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of fairly inconsistent basic indicators, Bridger Aerospace showed solid returns over the last few months and may actually be approaching a breakup point.

Littelfuse

Risk-Adjusted Performance

Very Weak

Over the last 90 days Littelfuse has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Bridger Aerospace and Littelfuse

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

The idea behind Bridger Aerospace Group and Littelfuse 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.

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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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.