Correlation Between Karat Packaging and ProShares Metaverse

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

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

Diversification Opportunities for Karat Packaging and ProShares Metaverse

0.54

Correlation Coefficient

Karat Packaging  ProShares Metaverse

Very weak diversification

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

Pair Corralation between Karat Packaging and ProShares Metaverse

Considering the 90-day investment horizon Karat Packaging is expected to under-perform the ProShares Metaverse. But the stock apears to be less risky and, when comparing its historical volatility, Karat Packaging is 1.21 times less risky than ProShares Metaverse. The stock trades about -0.06 of its potential returns per unit of risk. The ProShares Metaverse ETF is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest  5,015  in ProShares Metaverse ETF on December 29, 2024 and sell it today you would lose (246.00) from holding ProShares Metaverse ETF or give up 4.91% 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.  ProShares Metaverse ETF

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.

ProShares Metaverse ETF

Risk-Adjusted Performance

Very Weak

Over the last 90 days ProShares Metaverse ETF has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, ProShares Metaverse is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Karat Packaging and ProShares Metaverse

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

The idea behind Karat Packaging and ProShares Metaverse ETF 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.