Correlation Between Katapult Holdings and 70082LAB3

Can any of the company-specific risk be diversified away by investing in both Katapult Holdings and 70082LAB3 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 70082LAB3 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 US70082LAB36, you can compare the effects of market volatilities on Katapult Holdings and 70082LAB3 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 70082LAB3. Check out your portfolio center. Please also check ongoing floating volatility patterns of Katapult Holdings and 70082LAB3.

Diversification Opportunities for Katapult Holdings and 70082LAB3

0.03

Correlation Coefficient

Katapult Holdings  70082LAB3

Significant diversification

The 3 months correlation between Katapult and 70082LAB3 is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding Katapult Holdings Equity and US70082LAB36 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on US70082LAB36 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 70082LAB3. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of US70082LAB36 has no effect on the direction of Katapult Holdings i.e., Katapult Holdings and 70082LAB3 go up and down completely randomly.

Pair Corralation between Katapult Holdings and 70082LAB3

Assuming the 90 days horizon Katapult Holdings Equity is expected to generate 14.68 times more return on investment than 70082LAB3. However, Katapult Holdings is 14.68 times more volatile than US70082LAB36. It trades about 0.04 of its potential returns per unit of risk. US70082LAB36 is currently generating about 0.55 per unit of risk. If you would invest  0.57  in Katapult Holdings Equity on July 15, 2024 and sell it today you would lose (0.02) from holding Katapult Holdings Equity or give up 3.51% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	70.0%
Values	Daily Returns

Katapult Holdings Equity  vs.  US70082LAB36

Katapult Holdings Equity

Risk-Adjusted Performance

8 of 100

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.

US70082LAB36

Risk-Adjusted Performance

26 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in US70082LAB36 are ranked lower than 26 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, 70082LAB3 sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Katapult Holdings and 70082LAB3

The main advantage of trading using opposite Katapult Holdings and 70082LAB3 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Katapult Holdings position performs unexpectedly, 70082LAB3 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 70082LAB3 will offset losses from the drop in 70082LAB3's long position.

The idea behind Katapult Holdings Equity and US70082LAB36 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.