Correlation Between Quantum and Bridger Aerospace

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

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

Diversification Opportunities for Quantum and Bridger Aerospace

-0.64

Correlation Coefficient

Quantum  Bridger Aerospace

Excellent diversification

The 3 months correlation between Quantum and Bridger is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding Quantum and Bridger Aerospace Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bridger Aerospace and Quantum 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 Quantum 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 Quantum i.e., Quantum and Bridger Aerospace go up and down completely randomly.

Pair Corralation between Quantum and Bridger Aerospace

Given the investment horizon of 90 days Quantum is expected to generate 6.08 times more return on investment than Bridger Aerospace. However, Quantum is 6.08 times more volatile than Bridger Aerospace Group. It trades about 0.18 of its potential returns per unit of risk. Bridger Aerospace Group is currently generating about 0.3 per unit of risk. If you would invest  1,797  in Quantum on October 14, 2024 and sell it today you would earn a total of  950.00  from holding Quantum or generate 52.87% return on investment over 90 days.

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

Quantum  vs.  Bridger Aerospace Group

Quantum

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Quantum are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of very inconsistent fundamental indicators, Quantum displayed solid returns over the last few months and may actually be approaching a breakup point.

Bridger Aerospace

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Bridger Aerospace Group are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Even with relatively unsteady technical and fundamental indicators, Bridger Aerospace reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Quantum and Bridger Aerospace

The main advantage of trading using opposite Quantum and Bridger Aerospace positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Quantum 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 Quantum 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.