Correlation Between NYSE Composite and Karat Packaging
Can any of the company-specific risk be diversified away by investing in both NYSE Composite and Karat Packaging 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 NYSE Composite and Karat Packaging into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NYSE Composite and Karat Packaging, you can compare the effects of market volatilities on NYSE Composite and Karat Packaging 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 NYSE Composite with a short position of Karat Packaging. Check out your portfolio center. Please also check ongoing floating volatility patterns of NYSE Composite and Karat Packaging.
Diversification Opportunities for NYSE Composite and Karat Packaging
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between NYSE and Karat is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding NYSE Composite and Karat Packaging in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Karat Packaging and NYSE Composite 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 NYSE Composite are associated (or correlated) with Karat Packaging. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Karat Packaging has no effect on the direction of NYSE Composite i.e., NYSE Composite and Karat Packaging go up and down completely randomly.
Pair Corralation between NYSE Composite and Karat Packaging
Assuming the 90 days trading horizon NYSE Composite is expected to generate 5.01 times less return on investment than Karat Packaging. But when comparing it to its historical volatility, NYSE Composite is 3.71 times less risky than Karat Packaging. It trades about 0.24 of its potential returns per unit of risk. Karat Packaging is currently generating about 0.32 of returns per unit of risk over similar time horizon. 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 Together |
| Strength | Strong |
| Accuracy | 95.45% |
| Values | Daily Returns |
NYSE Composite vs. Karat Packaging
Performance |
| Timeline |
NYSE Composite and Karat Packaging Volatility Contrast
Predicted Return Density |
| Returns |
NYSE Composite
Pair trading matchups for NYSE Composite
Karat Packaging
Pair trading matchups for Karat Packaging
Pair Trading with NYSE Composite and Karat Packaging
The main advantage of trading using opposite NYSE Composite and Karat Packaging positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NYSE Composite position performs unexpectedly, Karat Packaging 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 Karat Packaging will offset losses from the drop in Karat Packaging's long position.| NYSE Composite vs. Vita Coco | NYSE Composite vs. Franklin Wireless Corp | NYSE Composite vs. Ambev SA ADR | NYSE Composite vs. Toro Co |
| Karat Packaging vs. Greif Bros | Karat Packaging vs. Reynolds Consumer Products | Karat Packaging vs. Silgan Holdings | Karat Packaging vs. O I Glass |
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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.
Other Complementary Tools
| Sectors List of equity sectors categorizing publicly traded companies based on their primary business activities | |
| Money Flow Index Determine momentum by analyzing Money Flow Index and other technical indicators | |
| Volatility Analysis Get historical volatility and risk analysis based on latest market data | |
| Portfolio Anywhere Track or share privately all of your investments from the convenience of any device | |
| Investing Opportunities Build portfolios using our predefined set of ideas and optimize them against your investing preferences |