Correlation Between Bridger Aerospace and ASSA ABLOY

Can any of the company-specific risk be diversified away by investing in both Bridger Aerospace and ASSA ABLOY 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 ASSA ABLOY 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 ASSA ABLOY AB, you can compare the effects of market volatilities on Bridger Aerospace and ASSA ABLOY 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 ASSA ABLOY. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bridger Aerospace and ASSA ABLOY.

Diversification Opportunities for Bridger Aerospace and ASSA ABLOY

-0.3

Correlation Coefficient

Bridger Aerospace  ASSA ABLOY

Very good diversification

The 3 months correlation between Bridger and ASSA is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding Bridger Aerospace Group and ASSA ABLOY AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ASSA ABLOY AB 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 ASSA ABLOY. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ASSA ABLOY AB has no effect on the direction of Bridger Aerospace i.e., Bridger Aerospace and ASSA ABLOY go up and down completely randomly.

Pair Corralation between Bridger Aerospace and ASSA ABLOY

Assuming the 90 days horizon Bridger Aerospace Group is expected to generate 24.35 times more return on investment than ASSA ABLOY. However, Bridger Aerospace is 24.35 times more volatile than ASSA ABLOY AB. It trades about 0.11 of its potential returns per unit of risk. ASSA ABLOY AB is currently generating about 0.2 per unit of risk. If you would invest  5.23  in Bridger Aerospace Group on December 20, 2024 and sell it today you would earn a total of  2.77  from holding Bridger Aerospace Group or generate 52.96% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.36%
Values	Daily Returns

Bridger Aerospace Group  vs.  ASSA ABLOY AB

Bridger Aerospace

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Bridger Aerospace Group are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of fairly uncertain basic indicators, Bridger Aerospace showed solid returns over the last few months and may actually be approaching a breakup point.

ASSA ABLOY AB

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in ASSA ABLOY AB are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, ASSA ABLOY may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Bridger Aerospace and ASSA ABLOY

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

The idea behind Bridger Aerospace Group and ASSA ABLOY AB 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.