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 Equity 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

0.39

Correlation Coefficient

Katapult Holdings  WM Technology

Weak diversification

The 3 months correlation between Katapult and MAPSW is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Katapult Holdings Equity 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 Equity 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

Assuming the 90 days horizon Katapult Holdings Equity is expected to generate 1.75 times more return on investment than WM Technology. However, Katapult Holdings is 1.75 times more volatile than WM Technology. It trades about 0.1 of its potential returns per unit of risk. WM Technology is currently generating about 0.06 per unit of risk. If you would invest  0.80  in Katapult Holdings Equity on December 30, 2024 and sell it today you would earn a total of  0.14  from holding Katapult Holdings Equity or generate 17.5% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	95.16%
Values	Daily Returns

Katapult Holdings Equity  vs.  WM Technology

Katapult Holdings Equity

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Katapult Holdings Equity are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Katapult Holdings showed solid returns over the last few months and may actually be approaching a breakup point.

WM Technology

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in WM Technology are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal 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 Equity 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.

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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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.