Correlation Between Ammo and Kratos Defense
Can any of the company-specific risk be diversified away by investing in both Ammo 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 Ammo and Kratos Defense into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ammo Inc and Kratos Defense Security, you can compare the effects of market volatilities on Ammo 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 Ammo with a short position of Kratos Defense. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ammo and Kratos Defense.
Diversification Opportunities for Ammo and Kratos Defense
-0.5 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Ammo and Kratos is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding Ammo Inc 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 Ammo 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 Ammo Inc 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 Ammo i.e., Ammo and Kratos Defense go up and down completely randomly.
Pair Corralation between Ammo and Kratos Defense
Given the investment horizon of 90 days Ammo is expected to generate 1.13 times less return on investment than Kratos Defense. In addition to that, Ammo is 1.39 times more volatile than Kratos Defense Security. It trades about 0.08 of its total potential returns per unit of risk. Kratos Defense Security is currently generating about 0.13 per unit of volatility. 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 Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ammo Inc vs. Kratos Defense Security
Performance |
| Timeline |
| Ammo Inc |
| Kratos Defense Security |
Ammo and Kratos Defense Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ammo and Kratos Defense
The main advantage of trading using opposite Ammo and Kratos Defense positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ammo 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.| Ammo vs. Sturm Ruger | Ammo vs. Kratos Defense Security | Ammo vs. VSE Corporation | Ammo vs. Smith Wesson Brands |
| Kratos Defense vs. Northrop Grumman | Kratos Defense vs. General Dynamics | Kratos Defense vs. Raytheon Technologies Corp | Kratos Defense vs. Huntington Ingalls 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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