Correlation Between Microsoft and Blade Air
Can any of the company-specific risk be diversified away by investing in both Microsoft 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 Microsoft and Blade Air into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microsoft and Blade Air Mobility, you can compare the effects of market volatilities on Microsoft 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 Microsoft with a short position of Blade Air. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and Blade Air.
Diversification Opportunities for Microsoft and Blade Air
Average diversification
The 3 months correlation between Microsoft and Blade is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft 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 Microsoft 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 Microsoft 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 Microsoft i.e., Microsoft and Blade Air go up and down completely randomly.
Pair Corralation between Microsoft and Blade Air
Given the investment horizon of 90 days Microsoft is expected to generate 1.5 times less return on investment than Blade Air. But when comparing it to its historical volatility, Microsoft is 3.55 times less risky than Blade Air. It trades about 0.05 of its potential returns per unit of risk. Blade Air Mobility is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 333.00 in Blade Air Mobility on August 27, 2024 and sell it today you would lose (3.00) from holding Blade Air Mobility or give up 0.9% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Microsoft vs. Blade Air Mobility
Performance |
| Timeline |
| Microsoft |
| Blade Air Mobility |
Microsoft and Blade Air Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microsoft and Blade Air
The main advantage of trading using opposite Microsoft and Blade Air positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft 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.| Microsoft vs. GigaCloud Technology Class | Microsoft vs. Arqit Quantum | Microsoft vs. Cemtrex | Microsoft vs. Paysafe |
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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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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