Correlation Between Blade Air and AEye

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

Diversification Opportunities for Blade Air and AEye

0.41

Correlation Coefficient

Blade Air  AEye

Very weak diversification

The 3 months correlation between Blade and AEye is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Blade Air Mobility and AEye Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AEye 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 AEye. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AEye Inc has no effect on the direction of Blade Air i.e., Blade Air and AEye go up and down completely randomly.

Pair Corralation between Blade Air and AEye

Assuming the 90 days horizon Blade Air is expected to generate 55.28 times less return on investment than AEye. But when comparing it to its historical volatility, Blade Air Mobility is 4.98 times less risky than AEye. It trades about 0.05 of its potential returns per unit of risk. AEye Inc is currently generating about 0.52 of returns per unit of risk over similar time horizon. If you would invest  1.20  in AEye Inc on October 8, 2024 and sell it today you would earn a total of  11.30  from holding AEye Inc or generate 941.67% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	95.0%
Values	Daily Returns

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

AEye Inc

Risk-Adjusted Performance

23 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in AEye Inc are ranked lower than 23 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, AEye showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Blade Air and AEye

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

The idea behind Blade Air Mobility and AEye 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.

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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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.