Correlation Between Wheels Up and Blade Air

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

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

Diversification Opportunities for Wheels Up and Blade Air

-0.22

Correlation Coefficient

Wheels Up  Blade Air

Very good diversification

The 3 months correlation between Wheels and Blade is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding Wheels Up Experience 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 Wheels Up 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 Wheels Up Experience 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 Wheels Up i.e., Wheels Up and Blade Air go up and down completely randomly.

Pair Corralation between Wheels Up and Blade Air

Allowing for the 90-day total investment horizon Wheels Up Experience is expected to under-perform the Blade Air. In addition to that, Wheels Up is 1.11 times more volatile than Blade Air Mobility. It trades about -0.06 of its total potential returns per unit of risk. Blade Air Mobility is currently generating about 0.14 per unit of volatility. If you would invest  355.00  in Blade Air Mobility on October 9, 2024 and sell it today you would earn a total of  136.00  from holding Blade Air Mobility or generate 38.31% return on investment over 90 days.

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

Wheels Up Experience  vs.  Blade Air Mobility

Wheels Up Experience

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Wheels Up Experience has generated negative risk-adjusted returns adding no value to investors with long positions. Even with unsteady performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in February 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

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Blade Air Mobility are ranked lower than 10 (%) 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.

Pair Trading with Wheels Up and Blade Air

The main advantage of trading using opposite Wheels Up and Blade Air positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wheels Up 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 Wheels Up Experience 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.