Correlation Between Bridger Aerospace and Roblox Corp

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

Diversification Opportunities for Bridger Aerospace and Roblox Corp

0.28

Correlation Coefficient

Bridger Aerospace  Roblox Corp

Modest diversification

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

Pair Corralation between Bridger Aerospace and Roblox Corp

Assuming the 90 days horizon Bridger Aerospace Group is expected to generate 5.99 times more return on investment than Roblox Corp. However, Bridger Aerospace is 5.99 times more volatile than Roblox Corp. It trades about 0.15 of its potential returns per unit of risk. Roblox Corp is currently generating about 0.24 per unit of risk. If you would invest  12.00  in Bridger Aerospace Group on October 25, 2024 and sell it today you would earn a total of  14.00  from holding Bridger Aerospace Group or generate 116.67% 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.  Roblox Corp

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 unsteady basic indicators, Bridger Aerospace showed solid returns over the last few months and may actually be approaching a breakup point.

Roblox Corp

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Roblox Corp are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak essential indicators, Roblox Corp showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Bridger Aerospace and Roblox Corp

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

The idea behind Bridger Aerospace Group and Roblox Corp 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.