Correlation Between Mogo and Katapult Holdings

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

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

Diversification Opportunities for Mogo and Katapult Holdings

0.28

Correlation Coefficient

Mogo  Katapult Holdings

Modest diversification

The 3 months correlation between Mogo and Katapult is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding Mogo Inc and Katapult Holdings Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Katapult Holdings Equity and Mogo 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 Mogo Inc 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 Equity has no effect on the direction of Mogo i.e., Mogo and Katapult Holdings go up and down completely randomly.

Pair Corralation between Mogo and Katapult Holdings

Given the investment horizon of 90 days Mogo Inc is expected to under-perform the Katapult Holdings. But the stock apears to be less risky and, when comparing its historical volatility, Mogo Inc is 5.43 times less risky than Katapult Holdings. The stock trades about -0.29 of its potential returns per unit of risk. The Katapult Holdings Equity is currently generating about 0.25 of returns per unit of risk over similar time horizon. If you would invest  0.51  in Katapult Holdings Equity on August 7, 2024 and sell it today you would earn a total of  0.34  from holding Katapult Holdings Equity or generate 66.67% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	95.45%
Values	Daily Returns

Mogo Inc  vs.  Katapult Holdings Equity

Mogo Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Mogo Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's technical and fundamental indicators remain very healthy which may send shares a bit higher in December 2024. The recent disarray may also be a sign of long period up-swing for the firm investors.

Katapult Holdings Equity

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Katapult Holdings Equity are ranked lower than 3 (%) 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.

Pair Trading with Mogo and Katapult Holdings

The main advantage of trading using opposite Mogo and Katapult Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mogo 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 Mogo Inc and Katapult Holdings Equity 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.