Correlation Between Bridger Aerospace and Global Digital

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

Diversification Opportunities for Bridger Aerospace and Global Digital

0.45

Correlation Coefficient

Bridger Aerospace  Global Digital

Very weak diversification

The 3 months correlation between Bridger and Global is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Bridger Aerospace Group and Global Digital Soltn in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global Digital Soltn 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 Global Digital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global Digital Soltn has no effect on the direction of Bridger Aerospace i.e., Bridger Aerospace and Global Digital go up and down completely randomly.

Pair Corralation between Bridger Aerospace and Global Digital

Assuming the 90 days horizon Bridger Aerospace Group is expected to generate 1.25 times more return on investment than Global Digital. However, Bridger Aerospace is 1.25 times more volatile than Global Digital Soltn. It trades about 0.12 of its potential returns per unit of risk. Global Digital Soltn is currently generating about 0.1 per unit of risk. If you would invest  14.00  in Bridger Aerospace Group on September 24, 2024 and sell it today you would lose (8.77) from holding Bridger Aerospace Group or give up 62.64% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	71.86%
Values	Daily Returns

Bridger Aerospace Group  vs.  Global Digital Soltn

Bridger Aerospace

Risk-Adjusted Performance

7 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Bridger Aerospace Group are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of fairly inconsistent basic indicators, Bridger Aerospace showed solid returns over the last few months and may actually be approaching a breakup point.

Global Digital Soltn

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Global Digital Soltn are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite fairly inconsistent basic indicators, Global Digital demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Bridger Aerospace and Global Digital

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

The idea behind Bridger Aerospace Group and Global Digital Soltn 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.