Correlation Between Westport Fuel and Karat Packaging
Can any of the company-specific risk be diversified away by investing in both Westport Fuel 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 Westport Fuel and Karat Packaging into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Westport Fuel Systems and Karat Packaging, you can compare the effects of market volatilities on Westport Fuel 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 Westport Fuel with a short position of Karat Packaging. Check out your portfolio center. Please also check ongoing floating volatility patterns of Westport Fuel and Karat Packaging.
Diversification Opportunities for Westport Fuel and Karat Packaging
-0.59 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Westport and Karat is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding Westport Fuel Systems and Karat Packaging in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Karat Packaging and Westport Fuel 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 Westport Fuel Systems 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 Westport Fuel i.e., Westport Fuel and Karat Packaging go up and down completely randomly.
Pair Corralation between Westport Fuel and Karat Packaging
Given the investment horizon of 90 days Westport Fuel is expected to generate 3.55 times less return on investment than Karat Packaging. But when comparing it to its historical volatility, Westport Fuel Systems is 1.15 times less risky than Karat Packaging. It trades about 0.1 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 27, 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 Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Westport Fuel Systems vs. Karat Packaging
Performance |
| Timeline |
| Westport Fuel Systems |
| Karat Packaging |
Westport Fuel and Karat Packaging Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Westport Fuel and Karat Packaging
The main advantage of trading using opposite Westport Fuel and Karat Packaging positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Westport Fuel 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.| Westport Fuel vs. Foresight Autonomous Holdings | Westport Fuel vs. Hyliion Holdings Corp | Westport Fuel vs. American Axle Manufacturing | Westport Fuel vs. Gentex |
| 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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