Correlation Between Salesforce and Kratos Defense
Can any of the company-specific risk be diversified away by investing in both Salesforce and Kratos Defense 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 Salesforce and Kratos Defense into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Salesforce and Kratos Defense Security, you can compare the effects of market volatilities on Salesforce and Kratos Defense 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 Salesforce with a short position of Kratos Defense. Check out your portfolio center. Please also check ongoing floating volatility patterns of Salesforce and Kratos Defense.
Diversification Opportunities for Salesforce and Kratos Defense
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Salesforce and Kratos is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Salesforce and Kratos Defense Security in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kratos Defense Security and Salesforce 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 Salesforce are associated (or correlated) with Kratos Defense. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kratos Defense Security has no effect on the direction of Salesforce i.e., Salesforce and Kratos Defense go up and down completely randomly.
Pair Corralation between Salesforce and Kratos Defense
Considering the 90-day investment horizon Salesforce is expected to generate 0.57 times more return on investment than Kratos Defense. However, Salesforce is 1.75 times less risky than Kratos Defense. It trades about 0.39 of its potential returns per unit of risk. Kratos Defense Security is currently generating about 0.13 per unit of risk. If you would invest 28,443 in Salesforce on August 24, 2024 and sell it today you would earn a total of 5,135 from holding Salesforce or generate 18.05% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Salesforce vs. Kratos Defense Security
Performance |
| Timeline |
| Salesforce |
| Kratos Defense Security |
Salesforce and Kratos Defense Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Salesforce and Kratos Defense
The main advantage of trading using opposite Salesforce and Kratos Defense positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Salesforce position performs unexpectedly, Kratos Defense 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 Kratos Defense will offset losses from the drop in Kratos Defense's long position.| Salesforce vs. Zoom Video Communications | Salesforce vs. C3 Ai Inc | Salesforce vs. Shopify | Salesforce vs. Workday |
| Kratos Defense vs. Planet Labs PBC | Kratos Defense vs. Rocket Lab USA | Kratos Defense vs. Redwire Corp | Kratos Defense vs. Virgin Galactic Holdings |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
Other Complementary Tools
| Volatility Analysis Get historical volatility and risk analysis based on latest market data | |
| Global Correlations Find global opportunities by holding instruments from different markets | |
| Portfolio Dashboard Portfolio dashboard that provides centralized access to all your investments | |
| Idea Analyzer Analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas | |
| Money Flow Index Determine momentum by analyzing Money Flow Index and other technical indicators |