Correlation Between Bridger Aerospace and ADT

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

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

Diversification Opportunities for Bridger Aerospace and ADT

0.57

Correlation Coefficient

Bridger Aerospace  ADT

Very weak diversification

The 3 months correlation between Bridger and ADT is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Bridger Aerospace Group and ADT Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ADT Inc and Bridger Aerospace 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 Bridger Aerospace Group are associated (or correlated) with ADT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ADT Inc has no effect on the direction of Bridger Aerospace i.e., Bridger Aerospace and ADT go up and down completely randomly.

Pair Corralation between Bridger Aerospace and ADT

Assuming the 90 days horizon Bridger Aerospace Group is expected to generate 9.92 times more return on investment than ADT. However, Bridger Aerospace is 9.92 times more volatile than ADT Inc. It trades about 0.16 of its potential returns per unit of risk. ADT Inc is currently generating about 0.05 per unit of risk. If you would invest  3.80  in Bridger Aerospace Group on August 30, 2024 and sell it today you would earn a total of  6.20  from holding Bridger Aerospace Group or generate 163.16% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	92.06%
Values	Daily Returns

Bridger Aerospace Group  vs.  ADT Inc

Bridger Aerospace

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Bridger Aerospace Group are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating basic indicators, Bridger Aerospace showed solid returns over the last few months and may actually be approaching a breakup point.

ADT Inc

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in ADT Inc are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady fundamental indicators, ADT may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Pair Trading with Bridger Aerospace and ADT

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

The idea behind Bridger Aerospace Group and ADT Inc 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.