Correlation Between Kratos Defense and Seiko Epson
Can any of the company-specific risk be diversified away by investing in both Kratos Defense and Seiko Epson 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 Seiko Epson 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 Seiko Epson, you can compare the effects of market volatilities on Kratos Defense and Seiko Epson 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 Seiko Epson. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kratos Defense and Seiko Epson.
Diversification Opportunities for Kratos Defense and Seiko Epson
-0.61 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Kratos and Seiko is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding Kratos Defense Security and Seiko Epson in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Seiko Epson 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 Seiko Epson. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Seiko Epson has no effect on the direction of Kratos Defense i.e., Kratos Defense and Seiko Epson go up and down completely randomly.
Pair Corralation between Kratos Defense and Seiko Epson
Given the investment horizon of 90 days Kratos Defense Security is expected to generate 2.72 times more return on investment than Seiko Epson. However, Kratos Defense is 2.72 times more volatile than Seiko Epson. It trades about 0.42 of its potential returns per unit of risk. Seiko Epson is currently generating about -0.07 per unit of risk. If you would invest 2,638 in Kratos Defense Security on November 1, 2024 and sell it today you would earn a total of 727.00 from holding Kratos Defense Security or generate 27.56% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Kratos Defense Security vs. Seiko Epson
Performance |
| Timeline |
| Kratos Defense Security |
| Seiko Epson |
Kratos Defense and Seiko Epson Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kratos Defense and Seiko Epson
The main advantage of trading using opposite Kratos Defense and Seiko Epson positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kratos Defense position performs unexpectedly, Seiko Epson 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 Seiko Epson will offset losses from the drop in Seiko Epson'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 |
| Seiko Epson vs. Quantum Computing | Seiko Epson vs. Rigetti Computing | Seiko Epson vs. D Wave Quantum | Seiko Epson vs. Red Cat 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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