Correlation Between Origin Materials and Blade Air

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

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

Diversification Opportunities for Origin Materials and Blade Air

0.4

Correlation Coefficient

Origin Materials  Blade Air

Very weak diversification

The 3 months correlation between Origin and Blade is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Origin Materials Warrant 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 Origin Materials 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 Origin Materials Warrant 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 Origin Materials i.e., Origin Materials and Blade Air go up and down completely randomly.

Pair Corralation between Origin Materials and Blade Air

Assuming the 90 days horizon Origin Materials Warrant is expected to under-perform the Blade Air. In addition to that, Origin Materials is 1.55 times more volatile than Blade Air Mobility. It trades about -0.14 of its total potential returns per unit of risk. Blade Air Mobility is currently generating about -0.15 per unit of volatility. If you would invest  26.00  in Blade Air Mobility on March 11, 2024 and sell it today you would lose (6.00) from holding Blade Air Mobility or give up 23.08% of portfolio value over 90 days.

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

Origin Materials Warrant  vs.  Blade Air Mobility

Origin Materials Warrant

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Origin Materials Warrant are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unsteady basic indicators, Origin Materials showed solid returns over the last few months and may actually be approaching a breakup point.

Blade Air Mobility

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Blade Air Mobility are ranked lower than 4 (%) 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.

Pair Trading with Origin Materials and Blade Air

The main advantage of trading using opposite Origin Materials and Blade Air positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Origin Materials 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 Origin Materials Warrant 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.