Correlation Between Karat Packaging and IShares
Can any of the company-specific risk be diversified away by investing in both Karat Packaging and IShares 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 IShares into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Karat Packaging and IShares, you can compare the effects of market volatilities on Karat Packaging and IShares 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 IShares. Check out your portfolio center. Please also check ongoing floating volatility patterns of Karat Packaging and IShares.
Diversification Opportunities for Karat Packaging and IShares
-0.61 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Karat and IShares is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding Karat Packaging and IShares in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IShares 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 IShares. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of IShares has no effect on the direction of Karat Packaging i.e., Karat Packaging and IShares go up and down completely randomly.
Pair Corralation between Karat Packaging and IShares
Considering the 90-day investment horizon Karat Packaging is expected to generate 0.63 times more return on investment than IShares. However, Karat Packaging is 1.59 times less risky than IShares. It trades about 0.09 of its potential returns per unit of risk. IShares is currently generating about -0.04 per unit of risk. If you would invest 1,205 in Karat Packaging on September 3, 2024 and sell it today you would earn a total of 1,884 from holding Karat Packaging or generate 156.35% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 84.65% |
| Values | Daily Returns |
Karat Packaging vs. IShares
Performance |
| Timeline |
| Karat Packaging |
| IShares |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Karat Packaging and IShares Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Karat Packaging and IShares
The main advantage of trading using opposite Karat Packaging and IShares positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Karat Packaging position performs unexpectedly, IShares 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 IShares will offset losses from the drop in IShares' long position.| Karat Packaging vs. Greif Bros | Karat Packaging vs. Reynolds Consumer Products | Karat Packaging vs. Silgan Holdings | Karat Packaging vs. O I Glass |
| IShares vs. BlackRock Future Health | IShares vs. Goldman Sachs Innovate | IShares vs. iShares Tech Breakthrough |
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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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