Correlation Between Karat Packaging and Myers Industries

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

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

Diversification Opportunities for Karat Packaging and Myers Industries

0.07

Correlation Coefficient

Karat Packaging  Myers Industries

Significant diversification

The 3 months correlation between Karat and Myers is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Karat Packaging and Myers Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Myers Industries 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 Myers Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Myers Industries has no effect on the direction of Karat Packaging i.e., Karat Packaging and Myers Industries go up and down completely randomly.

Pair Corralation between Karat Packaging and Myers Industries

Considering the 90-day investment horizon Karat Packaging is expected to under-perform the Myers Industries. But the stock apears to be less risky and, when comparing its historical volatility, Karat Packaging is 2.26 times less risky than Myers Industries. The stock trades about -0.06 of its potential returns per unit of risk. The Myers Industries is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  1,131  in Myers Industries on December 26, 2024 and sell it today you would earn a total of  64.00  from holding Myers Industries or generate 5.66% return on investment over 90 days.

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

Karat Packaging  vs.  Myers Industries

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 weak 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.

Myers Industries

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Myers Industries are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak basic indicators, Myers Industries may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Karat Packaging and Myers Industries

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

The idea behind Karat Packaging and Myers Industries 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.