Correlation Between Blue Apron and Mercadolibre

By analyzing existing cross correlation between Blue Apron Holdings and Mercadolibre, you can compare the effects of market volatilities on Blue Apron and Mercadolibre 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 Mercadolibre. Check out your portfolio center. Please also check ongoing floating volatility patterns of Blue Apron and Mercadolibre.

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

Diversification Opportunities for Blue Apron and Mercadolibre

0.05
  Correlation Coefficient
Blue Apron Holdings
Mercadolibre

Significant diversification

The 3 months correlation between Blue Apron and Mercadolibre is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Blue Apron Holdings and Mercadolibre in the same portfolio assuming nothing else is changed. The correlation between historical prices or returns on Mercadolibre 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 Mercadolibre. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mercadolibre has no effect on the direction of Blue Apron i.e., Blue Apron and Mercadolibre go up and down completely randomly.

Pair Corralation between Blue Apron and Mercadolibre

Given the investment horizon of 90 days Blue Apron Holdings is expected to generate 1.05 times more return on investment than Mercadolibre. However, Blue Apron is 1.05 times more volatile than Mercadolibre. It trades about 0.14 of its potential returns per unit of risk. Mercadolibre is currently generating about -0.21 per unit of risk. If you would invest  706.00  in Blue Apron Holdings on October 25, 2021 and sell it today you would earn a total of  84.00  from holding Blue Apron Holdings or generate 11.9% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Blue Apron Holdings  vs.  Mercadolibre

 Performance (%) 
      Timeline 
Blue Apron Holdings 
Blue Apron Performance
1 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Blue Apron Holdings are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent basic indicators, Blue Apron is not utilizing all of its potentials. The current stock price mess, may contribute to short-term losses for the institutional investors.

Blue Apron Price Channel

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

Mercadolibre Price Channel

Blue Apron and Mercadolibre Volatility Contrast

 Predicted Return Density 
      Returns 

Pair Trading with Blue Apron and Mercadolibre

The main advantage of trading using opposite Blue Apron and Mercadolibre positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Blue Apron position performs unexpectedly, Mercadolibre 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 Mercadolibre will offset losses from the drop in Mercadolibre's long position.
The idea behind Blue Apron Holdings and Mercadolibre 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.

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