Correlation Between Bridger Aerospace and BIO Key

Can any of the company-specific risk be diversified away by investing in both Bridger Aerospace and BIO Key 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 BIO Key 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 BIO Key International, you can compare the effects of market volatilities on Bridger Aerospace and BIO Key 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 BIO Key. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bridger Aerospace and BIO Key.

Diversification Opportunities for Bridger Aerospace and BIO Key

-0.22

Correlation Coefficient

Bridger Aerospace  BIO Key

Very good diversification

The 3 months correlation between Bridger and BIO is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding Bridger Aerospace Group and BIO Key International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BIO Key International 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 BIO Key. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BIO Key International has no effect on the direction of Bridger Aerospace i.e., Bridger Aerospace and BIO Key go up and down completely randomly.

Pair Corralation between Bridger Aerospace and BIO Key

Assuming the 90 days horizon Bridger Aerospace Group is expected to generate 1.48 times more return on investment than BIO Key. However, Bridger Aerospace is 1.48 times more volatile than BIO Key International. It trades about 0.14 of its potential returns per unit of risk. BIO Key International is currently generating about 0.06 per unit of risk. If you would invest  4.90  in Bridger Aerospace Group on September 5, 2024 and sell it today you would earn a total of  5.10  from holding Bridger Aerospace Group or generate 104.08% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	93.65%
Values	Daily Returns

Bridger Aerospace Group  vs.  BIO Key International

Bridger Aerospace

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Bridger Aerospace Group are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of fairly uncertain basic indicators, Bridger Aerospace showed solid returns over the last few months and may actually be approaching a breakup point.

BIO Key International

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in BIO Key International are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite fairly conflicting basic indicators, BIO Key demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Bridger Aerospace and BIO Key

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

The idea behind Bridger Aerospace Group and BIO Key International 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.