Correlation Between Mill City and Bridger Aerospace

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

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

Diversification Opportunities for Mill City and Bridger Aerospace

-0.03

Correlation Coefficient

Mill City  Bridger Aerospace

Good diversification

The 3 months correlation between Mill and Bridger is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding Mill City Ventures and Bridger Aerospace Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bridger Aerospace and Mill City 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 Mill City Ventures 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 Mill City i.e., Mill City and Bridger Aerospace go up and down completely randomly.

Pair Corralation between Mill City and Bridger Aerospace

Given the investment horizon of 90 days Mill City is expected to generate 1.31 times less return on investment than Bridger Aerospace. But when comparing it to its historical volatility, Mill City Ventures is 1.09 times less risky than Bridger Aerospace. It trades about 0.06 of its potential returns per unit of risk. 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 October 7, 2024 and sell it today you would lose (9.52) from holding Bridger Aerospace Group or give up 59.5% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	87.39%
Values	Daily Returns

Mill City Ventures  vs.  Bridger Aerospace Group

Mill City Ventures

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Mill City Ventures are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Mill City is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

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.

Pair Trading with Mill City and Bridger Aerospace

The main advantage of trading using opposite Mill City and Bridger Aerospace positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mill City 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 Mill City Ventures 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.

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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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.