Correlation Between Via Renewables and Blade Air

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Can any of the company-specific risk be diversified away by investing in both Via Renewables and Blade Air 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 Via Renewables and Blade Air into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Via Renewables and Blade Air Mobility, you can compare the effects of market volatilities on Via Renewables and Blade Air 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 Via Renewables with a short position of Blade Air. Check out your portfolio center. Please also check ongoing floating volatility patterns of Via Renewables and Blade Air.

Diversification Opportunities for Via Renewables and Blade Air

0.7
  Correlation Coefficient

Poor diversification

The 3 months correlation between Via and Blade is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Via Renewables and Blade Air Mobility in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Blade Air Mobility and Via Renewables 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 Via Renewables are associated (or correlated) with Blade Air. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Blade Air Mobility has no effect on the direction of Via Renewables i.e., Via Renewables and Blade Air go up and down completely randomly.

Pair Corralation between Via Renewables and Blade Air

Assuming the 90 days horizon Via Renewables is expected to generate 11.49 times less return on investment than Blade Air. But when comparing it to its historical volatility, Via Renewables is 10.1 times less risky than Blade Air. It trades about 0.13 of its potential returns per unit of risk. Blade Air Mobility is currently generating about 0.14 of returns per unit of risk over similar time horizon. 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 Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy98.41%
ValuesDaily Returns

Via Renewables  vs.  Blade Air Mobility

 Performance 
       Timeline  
Via Renewables 

Risk-Adjusted Performance

9 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in Via Renewables are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Even with relatively unsteady basic indicators, Via Renewables may actually be approaching a critical reversion point that can send shares even higher in January 2025.
Blade Air Mobility 

Risk-Adjusted Performance

11 of 100

 
Weak
 
Strong
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.

Via Renewables and Blade Air Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Via Renewables and Blade Air

The main advantage of trading using opposite Via Renewables and Blade Air positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Via Renewables position performs unexpectedly, Blade Air 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 Blade Air will offset losses from the drop in Blade Air's long position.
The idea behind Via Renewables and Blade Air Mobility 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..

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