Correlation Between Blade Air and Arq

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

Diversification Opportunities for Blade Air and Arq

0.73

Correlation Coefficient

Blade Air  Arq

Poor diversification

The 3 months correlation between Blade and Arq is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Blade Air Mobility and Arq Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Arq Inc 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 Arq. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Arq Inc has no effect on the direction of Blade Air i.e., Blade Air and Arq go up and down completely randomly.

Pair Corralation between Blade Air and Arq

Assuming the 90 days horizon Blade Air Mobility is expected to generate 2.85 times more return on investment than Arq. However, Blade Air is 2.85 times more volatile than Arq Inc. It trades about 0.01 of its potential returns per unit of risk. Arq Inc is currently generating about -0.26 per unit of risk. If you would invest  40.00  in Blade Air Mobility on September 25, 2024 and sell it today you would lose (1.00) from holding Blade Air Mobility or give up 2.5% of portfolio value over 90 days.

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

Blade Air Mobility  vs.  Arq Inc

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 abnormal technical and fundamental indicators, Blade Air showed solid returns over the last few months and may actually be approaching a breakup point.

Arq Inc

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Arq Inc are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Even with relatively inconsistent basic indicators, Arq reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Blade Air and Arq

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

The idea behind Blade Air Mobility and Arq Inc 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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.