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

-0.4

Correlation Coefficient

Katapult Holdings  WM Technology

Very good diversification

The 3 months correlation between Katapult and MAPSW is -0.4. 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 generate 33.49 times less return on investment than WM Technology. But when comparing it to its historical volatility, Katapult Holdings is 2.91 times less risky than WM Technology. It trades about 0.01 of its potential returns per unit of risk. WM Technology is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  3.00  in WM Technology on September 21, 2024 and sell it today you would earn a total of  0.59  from holding WM Technology or generate 19.67% return on investment over 90 days.

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

Katapult Holdings  vs.  WM Technology

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.

WM Technology

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in WM Technology are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of fairly inconsistent basic indicators, WM Technology showed solid returns over the last few months and may actually be approaching a breakup point.

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.

The idea behind Katapult Holdings and WM Technology 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.

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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.