Correlation Between Blade Air and Origin Materials

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

By analyzing existing cross correlation between Blade Air Mobility and Origin Materials Warrant, you can compare the effects of market volatilities on Blade Air and Origin Materials 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 Blade Air with a short position of Origin Materials. Check out your portfolio center. Please also check ongoing floating volatility patterns of Blade Air and Origin Materials.

Diversification Opportunities for Blade Air and Origin Materials

-0.03

Correlation Coefficient

Blade Air  Origin Materials

Good diversification

The 3 months correlation between Blade and Origin is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding Blade Air Mobility and Origin Materials Warrant in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Origin Materials Warrant and Blade Air 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 Blade Air Mobility are associated (or correlated) with Origin Materials. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Origin Materials Warrant has no effect on the direction of Blade Air i.e., Blade Air and Origin Materials go up and down completely randomly.

Pair Corralation between Blade Air and Origin Materials

Assuming the 90 days horizon Blade Air Mobility is expected to generate 0.88 times more return on investment than Origin Materials. However, Blade Air Mobility is 1.14 times less risky than Origin Materials. It trades about 0.14 of its potential returns per unit of risk. Origin Materials Warrant is currently generating about 0.0 per unit of risk. If you would invest  20.00  in Blade Air Mobility on September 20, 2024 and sell it today you would earn a total of  18.00  from holding Blade Air Mobility or generate 90.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.41%
Values	Daily Returns

Blade Air Mobility  vs.  Origin Materials Warrant

Blade Air Mobility

Risk-Adjusted Performance

11 of 100

Good

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

Origin Materials Warrant

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Origin Materials Warrant has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Origin Materials is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Blade Air and Origin Materials

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

The idea behind Blade Air Mobility and Origin Materials Warrant 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.