Correlation Between Kratos Defense and Smith Wesson
Can any of the company-specific risk be diversified away by investing in both Kratos Defense and Smith Wesson 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 Smith Wesson 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 Smith Wesson Brands, you can compare the effects of market volatilities on Kratos Defense and Smith Wesson 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 Smith Wesson. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kratos Defense and Smith Wesson.
Diversification Opportunities for Kratos Defense and Smith Wesson
-0.44 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Kratos and Smith is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding Kratos Defense Security and Smith Wesson Brands in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Smith Wesson Brands 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 Smith Wesson. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Smith Wesson Brands has no effect on the direction of Kratos Defense i.e., Kratos Defense and Smith Wesson go up and down completely randomly.
Pair Corralation between Kratos Defense and Smith Wesson
Given the investment horizon of 90 days Kratos Defense Security is expected to under-perform the Smith Wesson. In addition to that, Kratos Defense is 3.05 times more volatile than Smith Wesson Brands. It trades about -0.33 of its total potential returns per unit of risk. Smith Wesson Brands is currently generating about 0.21 per unit of volatility. If you would invest 1,033 in Smith Wesson Brands on November 18, 2024 and sell it today you would earn a total of 43.00 from holding Smith Wesson Brands or generate 4.16% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Kratos Defense Security vs. Smith Wesson Brands
Performance |
| Timeline |
| Kratos Defense Security |
| Smith Wesson Brands |
Kratos Defense and Smith Wesson Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kratos Defense and Smith Wesson
The main advantage of trading using opposite Kratos Defense and Smith Wesson positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kratos Defense position performs unexpectedly, Smith Wesson 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 Smith Wesson will offset losses from the drop in Smith Wesson'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 |
| Smith Wesson vs. Ammo Inc | Smith Wesson vs. Park Electrochemical | Smith Wesson vs. Ammo Preferred | Smith Wesson vs. National Presto Industries |
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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
Other Complementary Tools
| Equity Valuation Check real value of public entities based on technical and fundamental data | |
| Positions Ratings Determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Portfolio Analyzer Portfolio analysis module that provides access to portfolio diagnostics and optimization engine | |
| Portfolio Rebalancing Analyze risk-adjusted returns against different time horizons to find asset-allocation targets | |
| Price Ceiling Movement Calculate and plot Price Ceiling Movement for different equity instruments |