Correlation Between Carvana Co and Blue Apron

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

Diversification Opportunities for Carvana Co and Blue Apron

0.85
  Correlation Coefficient

Very poor diversification

The 3 months correlation between Carvana and Blue Apron is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Carvana Co Cl and Blue Apron Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Blue Apron Holdings and Carvana Co 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 Carvana Co Cl are associated (or correlated) with Blue Apron. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Blue Apron Holdings has no effect on the direction of Carvana Co i.e., Carvana Co and Blue Apron go up and down completely randomly.

Pair Corralation between Carvana Co and Blue Apron

Given the investment horizon of 90 days Carvana Co Cl is expected to under-perform the Blue Apron. In addition to that, Carvana Co is 1.22 times more volatile than Blue Apron Holdings. It trades about -0.2 of its total potential returns per unit of risk. Blue Apron Holdings is currently generating about 0.07 per unit of volatility. 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

Carvana Co Cl  vs.  Blue Apron Holdings

 Performance (%) 
      Timeline 
Carvana Co Cl 
Carvana Performance
0 of 100
Over the last 90 days Carvana Co Cl 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 somewhat strong which may send shares a bit higher in June 2022. The current disturbance may also be a sign of long term up-swing for the company investors.

Carvana Price Channel

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

Carvana Co and Blue Apron Volatility Contrast

 Predicted Return Density 
      Returns 

Pair Trading with Carvana Co and Blue Apron

The main advantage of trading using opposite Carvana Co and Blue Apron positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Carvana Co position performs unexpectedly, Blue Apron 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 Blue Apron will offset losses from the drop in Blue Apron's long position.
The idea behind Carvana Co Cl and Blue Apron Holdings 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.

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