Correlation Between Blue Apron and Microsoft Corp

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Can any of the company-specific risk be diversified away by investing in both Blue Apron and Microsoft Corp 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 Microsoft Corp 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 Microsoft Corp, you can compare the effects of market volatilities on Blue Apron and Microsoft Corp 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 Microsoft Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Blue Apron and Microsoft Corp.

Diversification Opportunities for Blue Apron and Microsoft Corp

-0.4
  Correlation Coefficient

Very good diversification

The 1 month correlation between Blue Apron and Microsoft is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Blue Apron Holdings and Microsoft Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Microsoft Corp 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 Microsoft Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Microsoft Corp has no effect on the direction of Blue Apron i.e., Blue Apron and Microsoft Corp go up and down completely randomly.

Pair Corralation between Blue Apron and Microsoft Corp

Given the investment horizon of 90 days Blue Apron Holdings is expected to generate 3.36 times more return on investment than Microsoft Corp. However, Blue Apron is 3.36 times more volatile than Microsoft Corp. It trades about 0.1 of its potential returns per unit of risk. Microsoft Corp is currently generating about 0.13 per unit of risk. If you would invest  263.00  in Blue Apron Holdings on May 11, 2022 and sell it today you would earn a total of  51.00  from holding Blue Apron Holdings or generate 19.39% return on investment over 90 days.
Time Period1 Month [change]
DirectionMoves Against 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

Blue Apron Holdings  vs.  Microsoft Corp

 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 September 2022. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Blue Apron Price Channel

Microsoft Corp 
Microsoft Performance
10 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Microsoft Corp are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak technical and fundamental indicators, Microsoft Corp unveiled solid returns over the last few months and may actually be approaching a breakup point.

Microsoft Price Channel

Blue Apron and Microsoft Corp Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Blue Apron and Microsoft Corp

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

Microsoft Corp

Pair trading matchups for Microsoft Corp

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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.

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