Correlation Between Karat Packaging and Fidelity Covington
Can any of the company-specific risk be diversified away by investing in both Karat Packaging and Fidelity Covington 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 Fidelity Covington into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Karat Packaging and Fidelity Covington Trust, you can compare the effects of market volatilities on Karat Packaging and Fidelity Covington 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 Fidelity Covington. Check out your portfolio center. Please also check ongoing floating volatility patterns of Karat Packaging and Fidelity Covington.
Diversification Opportunities for Karat Packaging and Fidelity Covington
0.96 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Karat and Fidelity is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding Karat Packaging and Fidelity Covington Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity Covington Trust 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 Fidelity Covington. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fidelity Covington Trust has no effect on the direction of Karat Packaging i.e., Karat Packaging and Fidelity Covington go up and down completely randomly.
Pair Corralation between Karat Packaging and Fidelity Covington
Considering the 90-day investment horizon Karat Packaging is expected to generate 1.7 times less return on investment than Fidelity Covington. In addition to that, Karat Packaging is 1.9 times more volatile than Fidelity Covington Trust. It trades about 0.05 of its total potential returns per unit of risk. Fidelity Covington Trust is currently generating about 0.16 per unit of volatility. If you would invest 2,262 in Fidelity Covington Trust on September 1, 2024 and sell it today you would earn a total of 656.00 from holding Fidelity Covington Trust or generate 29.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Karat Packaging vs. Fidelity Covington Trust
Performance |
| Timeline |
| Karat Packaging |
| Fidelity Covington Trust |
Karat Packaging and Fidelity Covington Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Karat Packaging and Fidelity Covington
The main advantage of trading using opposite Karat Packaging and Fidelity Covington positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Karat Packaging position performs unexpectedly, Fidelity Covington 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 Fidelity Covington will offset losses from the drop in Fidelity Covington'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 |
| Fidelity Covington vs. Nexalin Technology | Fidelity Covington vs. Kilroy Realty Corp | Fidelity Covington vs. Highwoods Properties | Fidelity Covington vs. Karat Packaging |
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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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