Correlation Between Bridger Aerospace and Rail Vision

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

Diversification Opportunities for Bridger Aerospace and Rail Vision

-0.36

Correlation Coefficient

Bridger Aerospace  Rail Vision

Very good diversification

The 3 months correlation between Bridger and Rail is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Bridger Aerospace Group and Rail Vision Ltd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rail Vision 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 Rail Vision. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rail Vision has no effect on the direction of Bridger Aerospace i.e., Bridger Aerospace and Rail Vision go up and down completely randomly.

Pair Corralation between Bridger Aerospace and Rail Vision

Assuming the 90 days horizon Bridger Aerospace Group is expected to under-perform the Rail Vision. But the stock apears to be less risky and, when comparing its historical volatility, Bridger Aerospace Group is 1.92 times less risky than Rail Vision. The stock trades about -0.07 of its potential returns per unit of risk. The Rail Vision Ltd is currently generating about 0.35 of returns per unit of risk over similar time horizon. If you would invest  45.00  in Rail Vision Ltd on October 5, 2024 and sell it today you would earn a total of  158.00  from holding Rail Vision Ltd or generate 351.11% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Bridger Aerospace Group  vs.  Rail Vision Ltd

Bridger Aerospace

Risk-Adjusted Performance

8 of 100

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

Rail Vision

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Rail Vision Ltd are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of very weak basic indicators, Rail Vision displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Bridger Aerospace and Rail Vision

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

The idea behind Bridger Aerospace Group and Rail Vision Ltd 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.