Correlation Between Liberty Defense and Bridger Aerospace

Can any of the company-specific risk be diversified away by investing in both Liberty Defense and Bridger Aerospace 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 Liberty Defense and Bridger Aerospace into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Liberty Defense Holdings and Bridger Aerospace Group, you can compare the effects of market volatilities on Liberty Defense and Bridger Aerospace 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 Liberty Defense with a short position of Bridger Aerospace. Check out your portfolio center. Please also check ongoing floating volatility patterns of Liberty Defense and Bridger Aerospace.

Diversification Opportunities for Liberty Defense and Bridger Aerospace

-0.41

Correlation Coefficient

Liberty Defense  Bridger Aerospace

Very good diversification

The 3 months correlation between Liberty and Bridger is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding Liberty Defense Holdings and Bridger Aerospace Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bridger Aerospace and Liberty Defense 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 Liberty Defense Holdings are associated (or correlated) with Bridger Aerospace. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bridger Aerospace has no effect on the direction of Liberty Defense i.e., Liberty Defense and Bridger Aerospace go up and down completely randomly.

Pair Corralation between Liberty Defense and Bridger Aerospace

Assuming the 90 days horizon Liberty Defense Holdings is expected to under-perform the Bridger Aerospace. But the otc stock apears to be less risky and, when comparing its historical volatility, Liberty Defense Holdings is 10.95 times less risky than Bridger Aerospace. The otc stock trades about 0.0 of its potential returns per unit of risk. The Bridger Aerospace Group is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  16.00  in Bridger Aerospace Group on September 26, 2024 and sell it today you would lose (10.90) from holding Bridger Aerospace Group or give up 68.12% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	80.89%
Values	Daily Returns

Liberty Defense Holdings  vs.  Bridger Aerospace Group

Liberty Defense Holdings

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Liberty Defense Holdings are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly abnormal technical and fundamental indicators, Liberty Defense may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Bridger Aerospace

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Bridger Aerospace Group are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of fairly uncertain basic indicators, Bridger Aerospace showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Liberty Defense and Bridger Aerospace

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

The idea behind Liberty Defense Holdings and Bridger Aerospace Group 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 Global Correlations module to find global opportunities by holding instruments from different markets.