Correlation Between Blade Air and Vertical Aerospace

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

Diversification Opportunities for Blade Air and Vertical Aerospace

-0.1

Correlation Coefficient

Blade Air  Vertical Aerospace

Good diversification

The 3 months correlation between Blade and Vertical is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding Blade Air Mobility and Vertical Aerospace in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vertical Aerospace 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 Vertical Aerospace. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vertical Aerospace has no effect on the direction of Blade Air i.e., Blade Air and Vertical Aerospace go up and down completely randomly.

Pair Corralation between Blade Air and Vertical Aerospace

Given the investment horizon of 90 days Blade Air Mobility is expected to generate 0.43 times more return on investment than Vertical Aerospace. However, Blade Air Mobility is 2.3 times less risky than Vertical Aerospace. It trades about 0.2 of its potential returns per unit of risk. Vertical Aerospace is currently generating about 0.08 per unit of risk. If you would invest  293.00  in Blade Air Mobility on September 3, 2024 and sell it today you would earn a total of  181.00  from holding Blade Air Mobility or generate 61.77% return on investment over 90 days.

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

Blade Air Mobility  vs.  Vertical Aerospace

Blade Air Mobility

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Blade Air Mobility are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak fundamental indicators, Blade Air exhibited solid returns over the last few months and may actually be approaching a breakup point.

Vertical Aerospace

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Vertical Aerospace are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite quite weak basic indicators, Vertical Aerospace disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Blade Air and Vertical Aerospace

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

The idea behind Blade Air Mobility and Vertical Aerospace 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.