Correlation Between Bridger Aerospace and NL Industries
Can any of the company-specific risk be diversified away by investing in both Bridger Aerospace and NL Industries 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 NL Industries 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 NL Industries, you can compare the effects of market volatilities on Bridger Aerospace and NL Industries 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 NL Industries. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bridger Aerospace and NL Industries.
Diversification Opportunities for Bridger Aerospace and NL Industries
0.3 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Bridger and NL Industries is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding Bridger Aerospace Group and NL Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NL Industries 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 NL Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NL Industries has no effect on the direction of Bridger Aerospace i.e., Bridger Aerospace and NL Industries go up and down completely randomly.
Pair Corralation between Bridger Aerospace and NL Industries
Given the investment horizon of 90 days Bridger Aerospace Group is expected to under-perform the NL Industries. In addition to that, Bridger Aerospace is 2.09 times more volatile than NL Industries. It trades about -0.09 of its total potential returns per unit of risk. NL Industries is currently generating about -0.08 per unit of volatility. If you would invest 811.00 in NL Industries on December 1, 2024 and sell it today you would lose (124.00) from holding NL Industries or give up 15.29% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Bridger Aerospace Group vs. NL Industries
Performance |
Timeline |
Bridger Aerospace |
NL Industries |
Bridger Aerospace and NL Industries Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Bridger Aerospace and NL Industries
The main advantage of trading using opposite Bridger Aerospace and NL Industries positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bridger Aerospace position performs unexpectedly, NL Industries 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 NL Industries will offset losses from the drop in NL Industries' long position.Bridger Aerospace vs. Allegion PLC | Bridger Aerospace vs. MSA Safety | Bridger Aerospace vs. Resideo Technologies | Bridger Aerospace vs. NL Industries |
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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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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