Correlation Between Blue Apron and Imedia Brands

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Can any of the company-specific risk be diversified away by investing in both Blue Apron and Imedia Brands 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 Apron and Imedia Brands into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Blue Apron Holdings and Imedia Brands, you can compare the effects of market volatilities on Blue Apron and Imedia Brands 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 Apron with a short position of Imedia Brands. Check out your portfolio center. Please also check ongoing floating volatility patterns of Blue Apron and Imedia Brands.

Diversification Opportunities for Blue Apron and Imedia Brands

0.86
  Correlation Coefficient

Very poor diversification

The 3 months correlation between Blue Apron and Imedia is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Blue Apron Holdings and Imedia Brands in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Imedia Brands and Blue Apron 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 Apron Holdings are associated (or correlated) with Imedia Brands. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Imedia Brands has no effect on the direction of Blue Apron i.e., Blue Apron and Imedia Brands go up and down completely randomly.

Pair Corralation between Blue Apron and Imedia Brands

Given the investment horizon of 90 days Blue Apron Holdings is expected to generate 1.41 times more return on investment than Imedia Brands. However, Blue Apron is 1.41 times more volatile than Imedia Brands. It trades about 0.07 of its potential returns per unit of risk. Imedia Brands is currently generating about -0.42 per unit of risk. If you would invest  312.00  in Blue Apron Holdings on February 27, 2022 and sell it today you would earn a total of  22.00  from holding Blue Apron Holdings or generate 7.05% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthStrong
Accuracy100.0%
ValuesDaily Returns

Blue Apron Holdings  vs.  Imedia Brands

 Performance (%) 
      Timeline 
Blue Apron Holdings 
Blue Apron Performance
0 of 100
Over the last 90 days Blue Apron Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain quite persistent which may send shares a bit higher in June 2022. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Blue Apron Price Channel

Imedia Brands 
Imedia Performance
0 of 100
Over the last 90 days Imedia Brands has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's fundamental drivers remain nearly stable which may send shares a bit higher in June 2022. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Imedia Price Channel

Blue Apron and Imedia Brands Volatility Contrast

 Predicted Return Density 
      Returns 

Pair Trading with Blue Apron and Imedia Brands

The main advantage of trading using opposite Blue Apron and Imedia Brands positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Blue Apron position performs unexpectedly, Imedia Brands 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 Imedia Brands will offset losses from the drop in Imedia Brands' long position.
The idea behind Blue Apron Holdings and Imedia Brands 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.
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.

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