Correlation Between Karat Packaging and First Trust
Can any of the company-specific risk be diversified away by investing in both Karat Packaging and First Trust 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 First Trust into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Karat Packaging and First Trust Cloud, you can compare the effects of market volatilities on Karat Packaging and First Trust 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 First Trust. Check out your portfolio center. Please also check ongoing floating volatility patterns of Karat Packaging and First Trust.
Diversification Opportunities for Karat Packaging and First Trust
0.98 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Karat and First is 0.98. Overlapping area represents the amount of risk that can be diversified away by holding Karat Packaging and First Trust Cloud in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Trust Cloud 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 First Trust. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Trust Cloud has no effect on the direction of Karat Packaging i.e., Karat Packaging and First Trust go up and down completely randomly.
Pair Corralation between Karat Packaging and First Trust
Considering the 90-day investment horizon Karat Packaging is expected to generate 1.52 times more return on investment than First Trust. However, Karat Packaging is 1.52 times more volatile than First Trust Cloud. It trades about 0.32 of its potential returns per unit of risk. First Trust Cloud is currently generating about 0.44 per unit of risk. If you would invest 2,633 in Karat Packaging on September 1, 2024 and sell it today you would earn a total of 456.00 from holding Karat Packaging or generate 17.32% 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. First Trust Cloud
Performance |
| Timeline |
| Karat Packaging |
| First Trust Cloud |
Karat Packaging and First Trust Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Karat Packaging and First Trust
The main advantage of trading using opposite Karat Packaging and First Trust positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Karat Packaging position performs unexpectedly, First Trust 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 First Trust will offset losses from the drop in First Trust'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 |
| First Trust vs. Nexalin Technology | First Trust vs. Kilroy Realty Corp | First Trust vs. Highwoods Properties | First Trust 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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