Correlation Between Archer Aviation and Blade Air

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

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

Diversification Opportunities for Archer Aviation and Blade Air

0.79

Correlation Coefficient

Archer Aviation  Blade Air

Poor diversification

The 3 months correlation between Archer and Blade is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Archer Aviation 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 Archer Aviation 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 Archer Aviation 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 Archer Aviation i.e., Archer Aviation and Blade Air go up and down completely randomly.

Pair Corralation between Archer Aviation and Blade Air

Given the investment horizon of 90 days Archer Aviation is expected to generate 1.55 times more return on investment than Blade Air. However, Archer Aviation is 1.55 times more volatile than Blade Air Mobility. It trades about -0.03 of its potential returns per unit of risk. Blade Air Mobility is currently generating about -0.13 per unit of risk. If you would invest  1,006  in Archer Aviation on December 28, 2024 and sell it today you would lose (220.00) from holding Archer Aviation or give up 21.87% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Archer Aviation  vs.  Blade Air Mobility

Archer Aviation

Risk-Adjusted Performance

Very Weak

Over the last 90 days Archer Aviation has generated negative risk-adjusted returns adding no value to investors with long positions. Even with conflicting performance in the last few months, the Stock's technical indicators remain relatively invariable which may send shares a bit higher in April 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Blade Air Mobility

Risk-Adjusted Performance

Very Weak

Over the last 90 days Blade Air Mobility has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's fundamental indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Archer Aviation and Blade Air

The main advantage of trading using opposite Archer Aviation and Blade Air positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Archer Aviation 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 Archer Aviation 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.

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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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.