Correlation Between Beauty Health and Blade Air
Can any of the company-specific risk be diversified away by investing in both Beauty Health 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 Beauty Health and Blade Air into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Beauty Health Co and Blade Air Mobility, you can compare the effects of market volatilities on Beauty Health 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 Beauty Health with a short position of Blade Air. Check out your portfolio center. Please also check ongoing floating volatility patterns of Beauty Health and Blade Air.
Diversification Opportunities for Beauty Health and Blade Air
0.41 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Beauty and Blade is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Beauty Health Co 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 Beauty Health 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 Beauty Health Co 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 Beauty Health i.e., Beauty Health and Blade Air go up and down completely randomly.
Pair Corralation between Beauty Health and Blade Air
Given the investment horizon of 90 days Beauty Health Co is expected to under-perform the Blade Air. In addition to that, Beauty Health is 1.14 times more volatile than Blade Air Mobility. It trades about -0.16 of its total potential returns per unit of risk. Blade Air Mobility is currently generating about 0.01 per unit of volatility. If you would invest 379.00 in Blade Air Mobility on August 27, 2024 and sell it today you would lose (5.00) from holding Blade Air Mobility or give up 1.32% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Beauty Health Co vs. Blade Air Mobility
Performance |
| Timeline |
| Beauty Health |
| Blade Air Mobility |
Beauty Health and Blade Air Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Beauty Health and Blade Air
The main advantage of trading using opposite Beauty Health and Blade Air positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Beauty Health 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.| Beauty Health vs. Honest Company | Beauty Health vs. Hims Hers Health | Beauty Health vs. Procter Gamble | Beauty Health vs. Kimberly Clark |
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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 Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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