Correlation Between ProShares Metaverse and Karat Packaging
Can any of the company-specific risk be diversified away by investing in both ProShares Metaverse 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 ProShares Metaverse and Karat Packaging into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ProShares Metaverse ETF and Karat Packaging, you can compare the effects of market volatilities on ProShares Metaverse 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 ProShares Metaverse with a short position of Karat Packaging. Check out your portfolio center. Please also check ongoing floating volatility patterns of ProShares Metaverse and Karat Packaging.
Diversification Opportunities for ProShares Metaverse and Karat Packaging
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between ProShares and Karat is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding ProShares Metaverse ETF and Karat Packaging in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Karat Packaging and ProShares Metaverse 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 ProShares Metaverse ETF 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 ProShares Metaverse i.e., ProShares Metaverse and Karat Packaging go up and down completely randomly.
Pair Corralation between ProShares Metaverse and Karat Packaging
Given the investment horizon of 90 days ProShares Metaverse is expected to generate 2.24 times less return on investment than Karat Packaging. But when comparing it to its historical volatility, ProShares Metaverse ETF is 1.77 times less risky than Karat Packaging. It trades about 0.25 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 2,630 in Karat Packaging on September 2, 2024 and sell it today you would earn a total of 459.00 from holding Karat Packaging or generate 17.45% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
ProShares Metaverse ETF vs. Karat Packaging
Performance |
| Timeline |
| ProShares Metaverse ETF |
| Karat Packaging |
ProShares Metaverse and Karat Packaging Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ProShares Metaverse and Karat Packaging
The main advantage of trading using opposite ProShares Metaverse and Karat Packaging positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ProShares Metaverse 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.| ProShares Metaverse vs. Nexalin Technology | ProShares Metaverse vs. Kilroy Realty Corp | ProShares Metaverse vs. Highwoods Properties | ProShares Metaverse vs. Karat Packaging |
| 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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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