Correlation Between Karat Packaging and Amcor PLC
Can any of the company-specific risk be diversified away by investing in both Karat Packaging and Amcor PLC 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 Karat Packaging and Amcor PLC into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Karat Packaging and Amcor PLC, you can compare the effects of market volatilities on Karat Packaging and Amcor PLC 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 Karat Packaging with a short position of Amcor PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Karat Packaging and Amcor PLC.
Diversification Opportunities for Karat Packaging and Amcor PLC
-0.73 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Karat and Amcor is -0.73. Overlapping area represents the amount of risk that can be diversified away by holding Karat Packaging and Amcor PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amcor PLC and Karat Packaging 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 Karat Packaging are associated (or correlated) with Amcor PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Amcor PLC has no effect on the direction of Karat Packaging i.e., Karat Packaging and Amcor PLC go up and down completely randomly.
Pair Corralation between Karat Packaging and Amcor PLC
Considering the 90-day investment horizon Karat Packaging is expected to generate 1.08 times more return on investment than Amcor PLC. However, Karat Packaging is 1.08 times more volatile than Amcor PLC. It trades about 0.32 of its potential returns per unit of risk. Amcor PLC is currently generating about -0.08 per unit of risk. If you would invest 2,638 in Karat Packaging on August 28, 2024 and sell it today you would earn a total of 449.00 from holding Karat Packaging or generate 17.02% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Karat Packaging vs. Amcor PLC
Performance |
| Timeline |
| Karat Packaging |
| Amcor PLC |
Karat Packaging and Amcor PLC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Karat Packaging and Amcor PLC
The main advantage of trading using opposite Karat Packaging and Amcor PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Karat Packaging position performs unexpectedly, Amcor PLC 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 Amcor PLC will offset losses from the drop in Amcor PLC's long position.| Karat Packaging vs. Greif Bros | Karat Packaging vs. Reynolds Consumer Products | Karat Packaging vs. Silgan Holdings | Karat Packaging vs. O I Glass |
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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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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