Correlation Between Senstar Technologies and Bridger Aerospace

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

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

Diversification Opportunities for Senstar Technologies and Bridger Aerospace

0.04

Correlation Coefficient

Senstar Technologies  Bridger Aerospace

Significant diversification

The 3 months correlation between Senstar and Bridger is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Senstar Technologies and Bridger Aerospace Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bridger Aerospace and Senstar Technologies 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 Senstar Technologies 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 Senstar Technologies i.e., Senstar Technologies and Bridger Aerospace go up and down completely randomly.

Pair Corralation between Senstar Technologies and Bridger Aerospace

Considering the 90-day investment horizon Senstar Technologies is expected to generate 21.77 times less return on investment than Bridger Aerospace. But when comparing it to its historical volatility, Senstar Technologies is 18.83 times less risky than Bridger Aerospace. It trades about 0.07 of its potential returns per unit of risk. Bridger Aerospace Group is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  20.00  in Bridger Aerospace Group on October 22, 2024 and sell it today you would earn a total of  1.00  from holding Bridger Aerospace Group or generate 5.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	83.43%
Values	Daily Returns

Senstar Technologies  vs.  Bridger Aerospace Group

Senstar Technologies

Risk-Adjusted Performance

20 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Senstar Technologies are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Senstar Technologies unveiled solid returns over the last few months and may actually be approaching a breakup point.

Bridger Aerospace

Risk-Adjusted Performance

10 of 100

Good

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. In spite of fairly fragile basic indicators, Bridger Aerospace showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Senstar Technologies and Bridger Aerospace

The main advantage of trading using opposite Senstar Technologies and Bridger Aerospace positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Senstar Technologies 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 Senstar Technologies 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.