Correlation Between Kratos Defense and Innovative Solutions
Can any of the company-specific risk be diversified away by investing in both Kratos Defense and Innovative Solutions 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 Kratos Defense and Innovative Solutions into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Kratos Defense Security and Innovative Solutions and, you can compare the effects of market volatilities on Kratos Defense and Innovative Solutions 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 Kratos Defense with a short position of Innovative Solutions. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kratos Defense and Innovative Solutions.
Diversification Opportunities for Kratos Defense and Innovative Solutions
0.58 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Kratos and Innovative is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Kratos Defense Security and Innovative Solutions and in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Innovative Solutions and and Kratos Defense 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 Kratos Defense Security are associated (or correlated) with Innovative Solutions. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Innovative Solutions and has no effect on the direction of Kratos Defense i.e., Kratos Defense and Innovative Solutions go up and down completely randomly.
Pair Corralation between Kratos Defense and Innovative Solutions
Given the investment horizon of 90 days Kratos Defense Security is expected to generate 2.33 times more return on investment than Innovative Solutions. However, Kratos Defense is 2.33 times more volatile than Innovative Solutions and. It trades about 0.19 of its potential returns per unit of risk. Innovative Solutions and is currently generating about 0.24 per unit of risk. If you would invest 2,359 in Kratos Defense Security on August 31, 2024 and sell it today you would earn a total of 336.00 from holding Kratos Defense Security or generate 14.24% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Kratos Defense Security vs. Innovative Solutions and
Performance |
| Timeline |
| Kratos Defense Security |
| Innovative Solutions and |
Kratos Defense and Innovative Solutions Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kratos Defense and Innovative Solutions
The main advantage of trading using opposite Kratos Defense and Innovative Solutions positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kratos Defense position performs unexpectedly, Innovative Solutions 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 Innovative Solutions will offset losses from the drop in Innovative Solutions' long position.| Kratos Defense vs. Northrop Grumman | Kratos Defense vs. General Dynamics | Kratos Defense vs. Raytheon Technologies Corp | Kratos Defense vs. Huntington Ingalls Industries |
| Innovative Solutions vs. Park Electrochemical | Innovative Solutions vs. VSE Corporation | Innovative Solutions vs. Curtiss Wright | Innovative Solutions vs. Ducommun Incorporated |
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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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