Correlation Between Bridger Aerospace and ECARX Holdings

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

Diversification Opportunities for Bridger Aerospace and ECARX Holdings

-0.29

Correlation Coefficient

Bridger Aerospace  ECARX Holdings

Very good diversification

The 3 months correlation between Bridger and ECARX is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding Bridger Aerospace Group and ECARX Holdings Warrants in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ECARX Holdings Warrants 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 ECARX Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ECARX Holdings Warrants has no effect on the direction of Bridger Aerospace i.e., Bridger Aerospace and ECARX Holdings go up and down completely randomly.

Pair Corralation between Bridger Aerospace and ECARX Holdings

Assuming the 90 days horizon Bridger Aerospace is expected to generate 1.58 times less return on investment than ECARX Holdings. In addition to that, Bridger Aerospace is 1.16 times more volatile than ECARX Holdings Warrants. It trades about 0.08 of its total potential returns per unit of risk. ECARX Holdings Warrants is currently generating about 0.15 per unit of volatility. If you would invest  5.00  in ECARX Holdings Warrants on December 29, 2024 and sell it today you would earn a total of  4.55  from holding ECARX Holdings Warrants or generate 91.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	88.52%
Values	Daily Returns

Bridger Aerospace Group  vs.  ECARX Holdings Warrants

Bridger Aerospace

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Bridger Aerospace Group are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating basic indicators, Bridger Aerospace showed solid returns over the last few months and may actually be approaching a breakup point.

ECARX Holdings Warrants

Risk-Adjusted Performance

Good

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

Pair Trading with Bridger Aerospace and ECARX Holdings

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

The idea behind Bridger Aerospace Group and ECARX Holdings Warrants 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.