Correlation Between Total Stock and Blue Apron

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

Diversification Opportunities for Total Stock and Blue Apron

0.44
  Correlation Coefficient

Very weak diversification

The 3 months correlation between Total and Blue Apron is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Total Stock Market 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 Total Stock 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 Total Stock Market 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 Total Stock i.e., Total Stock and Blue Apron go up and down completely randomly.

Pair Corralation between Total Stock and Blue Apron

Considering the 90-day investment horizon Total Stock Market is expected to generate 0.21 times more return on investment than Blue Apron. However, Total Stock Market is 4.69 times less risky than Blue Apron. It trades about -0.1 of its potential returns per unit of risk. Blue Apron Holdings is currently generating about -0.08 per unit of risk. If you would invest  23,872  in Total Stock Market on February 18, 2022 and sell it today you would lose (4,340)  from holding Total Stock Market or give up 18.18% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

Total Stock Market  vs.  Blue Apron Holdings

 Performance (%) 
      Timeline 
Total Stock Market 
Total Performance
0 of 100
Over the last 90 days Total Stock Market has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Etf's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the Exchange Traded Fund stockholders.

Total 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 uncertain 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

Total Stock and Blue Apron Volatility Contrast

 Predicted Return Density 
      Returns 

Pair Trading with Total Stock and Blue Apron

The main advantage of trading using opposite Total Stock and Blue Apron positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Total Stock 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.

Total Stock Market

Pair trading matchups for Total Stock

The idea behind Total Stock Market 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.

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