Correlation Between First Responder and Bridger Aerospace

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

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

Diversification Opportunities for First Responder and Bridger Aerospace

-0.21

Correlation Coefficient

First Responder  Bridger Aerospace

Very good diversification

The 3 months correlation between First and Bridger is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding First Responder 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 First Responder 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 First Responder 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 First Responder i.e., First Responder and Bridger Aerospace go up and down completely randomly.

Pair Corralation between First Responder and Bridger Aerospace

Assuming the 90 days horizon First Responder Technologies is expected to generate 7.22 times more return on investment than Bridger Aerospace. However, First Responder is 7.22 times more volatile than Bridger Aerospace Group. It trades about 0.08 of its potential returns per unit of risk. Bridger Aerospace Group is currently generating about 0.0 per unit of risk. If you would invest  7.81  in First Responder Technologies on October 4, 2024 and sell it today you would lose (5.71) from holding First Responder Technologies or give up 73.11% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	99.8%
Values	Daily Returns

First Responder Technologies  vs.  Bridger Aerospace Group

First Responder Tech

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in First Responder Technologies are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly abnormal basic indicators, First Responder reported solid returns over the last few months and may actually be approaching a breakup point.

Bridger Aerospace

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Bridger Aerospace Group are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Even with relatively unsteady technical and fundamental indicators, Bridger Aerospace may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with First Responder and Bridger Aerospace

The main advantage of trading using opposite First Responder and Bridger Aerospace positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Responder 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 First Responder 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.