Correlation Between Blade Air and Archer Aviation

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

Diversification Opportunities for Blade Air and Archer Aviation

0.33

Correlation Coefficient

Blade Air  Archer Aviation

Weak diversification

The 3 months correlation between Blade and Archer is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Blade Air Mobility and Archer Aviation WT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Archer Aviation WT 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 Archer Aviation. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Archer Aviation WT has no effect on the direction of Blade Air i.e., Blade Air and Archer Aviation go up and down completely randomly.

Pair Corralation between Blade Air and Archer Aviation

Assuming the 90 days horizon Blade Air is expected to generate 1.61 times less return on investment than Archer Aviation. In addition to that, Blade Air is 1.14 times more volatile than Archer Aviation WT. It trades about 0.05 of its total potential returns per unit of risk. Archer Aviation WT is currently generating about 0.09 per unit of volatility. If you would invest  239.00  in Archer Aviation WT on October 23, 2024 and sell it today you would earn a total of  31.00  from holding Archer Aviation WT or generate 12.97% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	5.85%
Values	Daily Returns

Blade Air Mobility  vs.  Archer Aviation WT

Blade Air Mobility

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Blade Air Mobility are ranked lower than 8 (%) 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.

Archer Aviation WT

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Archer Aviation WT are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Archer Aviation unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Blade Air and Archer Aviation

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

The idea behind Blade Air Mobility and Archer Aviation WT 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.