Correlation Between Evertec and Katapult Holdings

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

By analyzing existing cross correlation between Evertec and Katapult Holdings, you can compare the effects of market volatilities on Evertec and Katapult Holdings 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 Evertec with a short position of Katapult Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Evertec and Katapult Holdings.

Diversification Opportunities for Evertec and Katapult Holdings

-0.53

Correlation Coefficient

Evertec  Katapult Holdings

Excellent diversification

The 3 months correlation between Evertec and Katapult is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding Evertec and Katapult Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Katapult Holdings and Evertec 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 Evertec are associated (or correlated) with Katapult Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Katapult Holdings has no effect on the direction of Evertec i.e., Evertec and Katapult Holdings go up and down completely randomly.

Pair Corralation between Evertec and Katapult Holdings

Given the investment horizon of 90 days Evertec is expected to generate 0.35 times more return on investment than Katapult Holdings. However, Evertec is 2.86 times less risky than Katapult Holdings. It trades about 0.07 of its potential returns per unit of risk. Katapult Holdings is currently generating about -0.13 per unit of risk. If you would invest  3,357  in Evertec on September 3, 2024 and sell it today you would earn a total of  243.00  from holding Evertec or generate 7.24% return on investment over 90 days.

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

Evertec  vs.  Katapult Holdings

Evertec

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Evertec are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak basic indicators, Evertec may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Katapult Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Katapult Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's essential indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Evertec and Katapult Holdings

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

The idea behind Evertec and Katapult Holdings 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.