Correlation Between Kratos Defense and National Presto
Can any of the company-specific risk be diversified away by investing in both Kratos Defense and National Presto 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 National Presto 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 National Presto Industries, you can compare the effects of market volatilities on Kratos Defense and National Presto 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 National Presto. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kratos Defense and National Presto.
Diversification Opportunities for Kratos Defense and National Presto
0.08 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Kratos and National is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding Kratos Defense Security and National Presto Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on National Presto Indu 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 National Presto. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of National Presto Indu has no effect on the direction of Kratos Defense i.e., Kratos Defense and National Presto go up and down completely randomly.
Pair Corralation between Kratos Defense and National Presto
Given the investment horizon of 90 days Kratos Defense Security is expected to generate 1.82 times more return on investment than National Presto. However, Kratos Defense is 1.82 times more volatile than National Presto Industries. It trades about 0.13 of its potential returns per unit of risk. National Presto Industries is currently generating about 0.16 per unit of risk. If you would invest 2,420 in Kratos Defense Security on August 28, 2024 and sell it today you would earn a total of 221.00 from holding Kratos Defense Security or generate 9.13% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Kratos Defense Security vs. National Presto Industries
Performance |
| Timeline |
| Kratos Defense Security |
| National Presto Indu |
Kratos Defense and National Presto Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kratos Defense and National Presto
The main advantage of trading using opposite Kratos Defense and National Presto positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kratos Defense position performs unexpectedly, National Presto 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 National Presto will offset losses from the drop in National Presto's long position.| Kratos Defense vs. Northrop Grumman | Kratos Defense vs. General Dynamics | Kratos Defense vs. Raytheon Technologies Corp | Kratos Defense vs. Huntington Ingalls Industries |
| National Presto vs. Park Electrochemical | National Presto vs. Ducommun Incorporated | National Presto vs. Innovative Solutions and | National Presto vs. VSE Corporation |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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