Correlation Between Karat Packaging and Fidelity Advisor

Can any of the company-specific risk be diversified away by investing in both Karat Packaging and Fidelity Advisor 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 Fidelity Advisor into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Karat Packaging and Fidelity Advisor Sumer, you can compare the effects of market volatilities on Karat Packaging and Fidelity Advisor 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 Fidelity Advisor. Check out your portfolio center. Please also check ongoing floating volatility patterns of Karat Packaging and Fidelity Advisor.

Diversification Opportunities for Karat Packaging and Fidelity Advisor

0.54

Correlation Coefficient

Karat Packaging  Fidelity Advisor

Very weak diversification

The 3 months correlation between Karat and Fidelity is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Karat Packaging and Fidelity Advisor Sumer in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity Advisor Sumer 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 Fidelity Advisor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fidelity Advisor Sumer has no effect on the direction of Karat Packaging i.e., Karat Packaging and Fidelity Advisor go up and down completely randomly.

Pair Corralation between Karat Packaging and Fidelity Advisor

Considering the 90-day investment horizon Karat Packaging is expected to generate 1.31 times more return on investment than Fidelity Advisor. However, Karat Packaging is 1.31 times more volatile than Fidelity Advisor Sumer. It trades about -0.06 of its potential returns per unit of risk. Fidelity Advisor Sumer is currently generating about -0.17 per unit of risk. If you would invest  2,949  in Karat Packaging on December 29, 2024 and sell it today you would lose (224.00) from holding Karat Packaging or give up 7.6% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Karat Packaging  vs.  Fidelity Advisor Sumer

Karat Packaging

Risk-Adjusted Performance

Very Weak

Over the last 90 days Karat Packaging has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest fragile performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Fidelity Advisor Sumer

Risk-Adjusted Performance

Very Weak

Over the last 90 days Fidelity Advisor Sumer has generated negative risk-adjusted returns adding no value to fund investors. In spite of weak performance in the last few months, the Fund's basic indicators remain fairly strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.

Pair Trading with Karat Packaging and Fidelity Advisor

The main advantage of trading using opposite Karat Packaging and Fidelity Advisor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Karat Packaging position performs unexpectedly, Fidelity Advisor 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 Fidelity Advisor will offset losses from the drop in Fidelity Advisor's long position.

The idea behind Karat Packaging and Fidelity Advisor Sumer pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.