Correlation Between Rave Restaurant and Blue Apron

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

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

Diversification Opportunities for Rave Restaurant and Blue Apron

0.39

Correlation Coefficient

Rave Restaurant  Blue Apron

Weak diversification

The 3 months correlation between Rave and Blue is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Rave Restaurant Group 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 Rave Restaurant 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 Rave Restaurant Group 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 Rave Restaurant i.e., Rave Restaurant and Blue Apron go up and down completely randomly.

Pair Corralation between Rave Restaurant and Blue Apron

Given the investment horizon of 90 days Rave Restaurant is expected to generate 91.75 times less return on investment than Blue Apron. But when comparing it to its historical volatility, Rave Restaurant Group is 4.7 times less risky than Blue Apron. It trades about 0.01 of its potential returns per unit of risk. Blue Apron Holdings is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  516.00  in Blue Apron Holdings on January 24, 2024 and sell it today you would earn a total of  783.00  from holding Blue Apron Holdings or generate 151.74% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	41.62%
Values	Daily Returns

Rave Restaurant Group  vs.  Blue Apron Holdings

Rave Restaurant Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Rave Restaurant Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, Rave Restaurant is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the 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 Rave Restaurant and Blue Apron

The main advantage of trading using opposite Rave Restaurant and Blue Apron positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Rave Restaurant 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 Rave Restaurant Group 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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.