Correlation Between Silgan Holdings and Karat Packaging
Can any of the company-specific risk be diversified away by investing in both Silgan Holdings 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 Silgan Holdings and Karat Packaging into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Silgan Holdings and Karat Packaging, you can compare the effects of market volatilities on Silgan Holdings 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 Silgan Holdings with a short position of Karat Packaging. Check out your portfolio center. Please also check ongoing floating volatility patterns of Silgan Holdings and Karat Packaging.
Diversification Opportunities for Silgan Holdings and Karat Packaging
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Silgan and Karat is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Silgan Holdings and Karat Packaging in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Karat Packaging and Silgan Holdings 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 Silgan Holdings 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 Silgan Holdings i.e., Silgan Holdings and Karat Packaging go up and down completely randomly.
Pair Corralation between Silgan Holdings and Karat Packaging
Given the investment horizon of 90 days Silgan Holdings is expected to generate 1.43 times less return on investment than Karat Packaging. But when comparing it to its historical volatility, Silgan Holdings is 2.02 times less risky than Karat Packaging. It trades about 0.34 of its potential returns per unit of risk. Karat Packaging is currently generating about 0.24 of returns per unit of risk over similar time horizon. If you would invest 2,622 in Karat Packaging on August 24, 2024 and sell it today you would earn a total of 338.00 from holding Karat Packaging or generate 12.89% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Silgan Holdings vs. Karat Packaging
Performance |
| Timeline |
| Silgan Holdings |
| Karat Packaging |
Silgan Holdings and Karat Packaging Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Silgan Holdings and Karat Packaging
The main advantage of trading using opposite Silgan Holdings and Karat Packaging positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Silgan Holdings 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.| Silgan Holdings vs. Pactiv Evergreen | Silgan Holdings vs. Myers Industries | Silgan Holdings vs. Sonoco Products | Silgan Holdings vs. Avery Dennison Corp |
| 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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