Correlation Between Blue Bird and AYRO

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

By analyzing existing cross correlation between Blue Bird Corp and AYRO Inc, you can compare the effects of market volatilities on Blue Bird and AYRO 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 Blue Bird with a short position of AYRO. Check out your portfolio center. Please also check ongoing floating volatility patterns of Blue Bird and AYRO.

Diversification Opportunities for Blue Bird and AYRO

0.65

Correlation Coefficient

Blue Bird  AYRO

Poor diversification

The 3 months correlation between Blue and AYRO is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Blue Bird Corp and AYRO Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AYRO Inc and Blue Bird 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 Blue Bird Corp are associated (or correlated) with AYRO. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AYRO Inc has no effect on the direction of Blue Bird i.e., Blue Bird and AYRO go up and down completely randomly.

Pair Corralation between Blue Bird and AYRO

Given the investment horizon of 90 days Blue Bird Corp is expected to generate 0.92 times more return on investment than AYRO. However, Blue Bird Corp is 1.09 times less risky than AYRO. It trades about 0.09 of its potential returns per unit of risk. AYRO Inc is currently generating about -0.05 per unit of risk. If you would invest  1,029  in Blue Bird Corp on September 3, 2024 and sell it today you would earn a total of  3,036  from holding Blue Bird Corp or generate 295.04% return on investment over 90 days.

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

Blue Bird Corp  vs.  AYRO Inc

Blue Bird Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Blue Bird Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's fundamental drivers remain rather sound which may send shares a bit higher in January 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

AYRO Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days AYRO Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Pair Trading with Blue Bird and AYRO

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

The idea behind Blue Bird Corp and AYRO 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.