Correlation Between Katapult Holdings and Ironnet

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

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

Diversification Opportunities for Katapult Holdings and Ironnet

0.78

Correlation Coefficient

Katapult Holdings  Ironnet

Poor diversification

The 3 months correlation between Katapult and Ironnet is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Katapult Holdings and Ironnet in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ironnet 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 Ironnet. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ironnet has no effect on the direction of Katapult Holdings i.e., Katapult Holdings and Ironnet go up and down completely randomly.

Pair Corralation between Katapult Holdings and Ironnet

Given the investment horizon of 90 days Katapult Holdings is expected to under-perform the Ironnet. But the stock apears to be less risky and, when comparing its historical volatility, Katapult Holdings is 1.9 times less risky than Ironnet. The stock trades about -0.02 of its potential returns per unit of risk. The Ironnet is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  23.00  in Ironnet on September 20, 2024 and sell it today you would lose (10.00) from holding Ironnet or give up 43.48% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	28.43%
Values	Daily Returns

Katapult Holdings  vs.  Ironnet

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.

Ironnet

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Katapult Holdings and Ironnet

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

The idea behind Katapult Holdings and Ironnet 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.