Correlation Between Bridger Aerospace and Blue Line

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

Diversification Opportunities for Bridger Aerospace and Blue Line

0.28

Correlation Coefficient

Bridger Aerospace  Blue Line

Modest diversification

The 3 months correlation between Bridger and Blue is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding Bridger Aerospace Group and Blue Line Protection in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Blue Line Protection 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 Blue Line. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Blue Line Protection has no effect on the direction of Bridger Aerospace i.e., Bridger Aerospace and Blue Line go up and down completely randomly.

Pair Corralation between Bridger Aerospace and Blue Line

Assuming the 90 days horizon Bridger Aerospace Group is expected to generate 2.23 times more return on investment than Blue Line. However, Bridger Aerospace is 2.23 times more volatile than Blue Line Protection. It trades about 0.22 of its potential returns per unit of risk. Blue Line Protection is currently generating about -0.05 per unit of risk. If you would invest  7.50  in Bridger Aerospace Group on October 11, 2024 and sell it today you would earn a total of  7.50  from holding Bridger Aerospace Group or generate 100.0% 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.  Blue Line Protection

Bridger Aerospace

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Bridger Aerospace Group are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Bridger Aerospace showed solid returns over the last few months and may actually be approaching a breakup point.

Blue Line Protection

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Blue Line Protection has generated negative risk-adjusted returns adding no value to investors with long positions. Despite inconsistent performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Bridger Aerospace and Blue Line

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

The idea behind Bridger Aerospace Group and Blue Line Protection 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.

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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.