Correlation Between Methode Electronics and Bridger Aerospace

Can any of the company-specific risk be diversified away by investing in both Methode 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 Methode 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 Methode Electronics and Bridger Aerospace Group, you can compare the effects of market volatilities on Methode 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 Methode Electronics with a short position of Bridger Aerospace. Check out your portfolio center. Please also check ongoing floating volatility patterns of Methode Electronics and Bridger Aerospace.

Diversification Opportunities for Methode Electronics and Bridger Aerospace

-0.73

Correlation Coefficient

Methode Electronics  Bridger Aerospace

Pay attention - limited upside

The 3 months correlation between Methode and Bridger is -0.73. Overlapping area represents the amount of risk that can be diversified away by holding Methode 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 Methode 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 Methode 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 Methode Electronics i.e., Methode Electronics and Bridger Aerospace go up and down completely randomly.

Pair Corralation between Methode Electronics and Bridger Aerospace

Considering the 90-day investment horizon Methode Electronics is expected to under-perform the Bridger Aerospace. But the stock apears to be less risky and, when comparing its historical volatility, Methode Electronics is 1.77 times less risky than Bridger Aerospace. The stock trades about -0.05 of its potential returns per unit of risk. The Bridger Aerospace Group is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest  797.00  in Bridger Aerospace Group on October 22, 2024 and sell it today you would lose (499.00) from holding Bridger Aerospace Group or give up 62.61% of portfolio value over 90 days.

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

Methode Electronics  vs.  Bridger Aerospace Group

Methode Electronics

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Methode Electronics are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite fairly unfluctuating technical and fundamental indicators, Methode Electronics demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Bridger Aerospace

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Bridger Aerospace Group has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest unsteady performance, the Stock's technical and fundamental indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

Pair Trading with Methode Electronics and Bridger Aerospace

The main advantage of trading using opposite Methode Electronics and Bridger Aerospace positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Methode 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.

The idea behind Methode Electronics and Bridger Aerospace Group 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..