Correlation Between Katapult Holdings and WM Technology
Can any of the company-specific risk be diversified away by investing in both Katapult Holdings and WM Technology 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 Katapult Holdings and WM Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Katapult Holdings and WM Technology, you can compare the effects of market volatilities on Katapult Holdings and WM Technology 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 Katapult Holdings with a short position of WM Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Katapult Holdings and WM Technology.
Diversification Opportunities for Katapult Holdings and WM Technology
0.22 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Katapult and MAPSW is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Katapult Holdings and WM Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WM Technology and Katapult Holdings 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 Katapult Holdings are associated (or correlated) with WM Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WM Technology has no effect on the direction of Katapult Holdings i.e., Katapult Holdings and WM Technology go up and down completely randomly.
Pair Corralation between Katapult Holdings and WM Technology
Given the investment horizon of 90 days Katapult Holdings is expected to under-perform the WM Technology. But the stock apears to be less risky and, when comparing its historical volatility, Katapult Holdings is 2.46 times less risky than WM Technology. The stock trades about -0.05 of its potential returns per unit of risk. The WM Technology is currently generating about 0.3 of returns per unit of risk over similar time horizon. If you would invest 2.01 in WM Technology on September 1, 2024 and sell it today you would earn a total of 2.00 from holding WM Technology or generate 99.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.24% |
| Values | Daily Returns |
Katapult Holdings vs. WM Technology
Performance |
| Timeline |
| Katapult Holdings |
| WM Technology |
Katapult Holdings and WM Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Katapult Holdings and WM Technology
The main advantage of trading using opposite Katapult Holdings and WM Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Katapult Holdings position performs unexpectedly, WM Technology 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 WM Technology will offset losses from the drop in WM Technology's long position.| Katapult Holdings vs. Alarum Technologies | Katapult Holdings vs. Nutanix | Katapult Holdings vs. Palo Alto Networks | Katapult Holdings vs. GigaCloud Technology Class |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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