Correlation Between Cisco Systems and Blue Apron

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

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

Diversification Opportunities for Cisco Systems and Blue Apron

-0.43

Correlation Coefficient

Cisco Systems  Blue Apron

Very good diversification

The 3 months correlation between Cisco and Blue is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding Cisco Systems 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 Cisco Systems 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 Cisco Systems 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 Cisco Systems i.e., Cisco Systems and Blue Apron go up and down completely randomly.

Pair Corralation between Cisco Systems and Blue Apron

If you would invest  4,590  in Cisco Systems on September 1, 2024 and sell it today you would earn a total of  1,331  from holding Cisco Systems or generate 29.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	0.79%
Values	Daily Returns

Cisco Systems  vs.  Blue Apron Holdings,

Cisco Systems

Risk-Adjusted Performance

21 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Cisco Systems are ranked lower than 21 (%) of all global equities and portfolios over the last 90 days. In spite of very conflicting fundamental indicators, Cisco Systems displayed solid returns over the last few months and may actually be approaching a breakup point.

Blue Apron Holdings,

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Blue Apron Holdings, has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Blue Apron is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Cisco Systems and Blue Apron

The main advantage of trading using opposite Cisco Systems and Blue Apron positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cisco Systems 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 Cisco Systems 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 the Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.