Correlation Between Natural Health and Blue Apron

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

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

Diversification Opportunities for Natural Health and Blue Apron

0.06

Correlation Coefficient

Natural Health  Blue Apron

Significant diversification

The 3 months correlation between Natural and Blue is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Natural Health Trend 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 Natural Health 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 Natural Health Trend 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 Natural Health i.e., Natural Health and Blue Apron go up and down completely randomly.

Pair Corralation between Natural Health and Blue Apron

Given the investment horizon of 90 days Natural Health Trend is expected to generate 0.26 times more return on investment than Blue Apron. However, Natural Health Trend is 3.81 times less risky than Blue Apron. It trades about 0.07 of its potential returns per unit of risk. Blue Apron Holdings, is currently generating about 0.01 per unit of risk. If you would invest  282.00  in Natural Health Trend on September 3, 2024 and sell it today you would earn a total of  260.00  from holding Natural Health Trend or generate 92.2% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	30.91%
Values	Daily Returns

Natural Health Trend  vs.  Blue Apron Holdings,

Natural Health Trend

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Natural Health Trend has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain rather sound which may send shares a bit higher in January 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

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 Natural Health and Blue Apron

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

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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.