Correlation Between Super Micro and Bridger Aerospace

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

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

Diversification Opportunities for Super Micro and Bridger Aerospace

-0.2

Correlation Coefficient

Super Micro  Bridger Aerospace

Good diversification

The 3 months correlation between Super and Bridger is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding Super Micro Computer and Bridger Aerospace Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bridger Aerospace and Super Micro 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 Super Micro Computer 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 Super Micro i.e., Super Micro and Bridger Aerospace go up and down completely randomly.

Pair Corralation between Super Micro and Bridger Aerospace

Given the investment horizon of 90 days Super Micro is expected to generate 10.5 times less return on investment than Bridger Aerospace. But when comparing it to its historical volatility, Super Micro Computer is 10.81 times less risky than Bridger Aerospace. It trades about 0.07 of its potential returns per unit of risk. Bridger Aerospace Group is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  21.00  in Bridger Aerospace Group on December 4, 2024 and sell it today you would lose (13.00) from holding Bridger Aerospace Group or give up 61.9% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	83.16%
Values	Daily Returns

Super Micro Computer  vs.  Bridger Aerospace Group

Super Micro Computer

Risk-Adjusted Performance

Very Weak

Over the last 90 days Super Micro Computer has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong fundamental indicators, Super Micro is not utilizing all of its potentials. The newest stock price confusion, may contribute to short-horizon losses for the traders.

Bridger Aerospace

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Bridger Aerospace Group are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unsteady basic indicators, Bridger Aerospace showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Super Micro and Bridger Aerospace

The main advantage of trading using opposite Super Micro and Bridger Aerospace positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Super Micro 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 Super Micro Computer 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.