Correlation Between Kratos Defense and Neo Performance
Can any of the company-specific risk be diversified away by investing in both Kratos Defense and Neo Performance 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 Neo Performance 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 Neo Performance Materials, you can compare the effects of market volatilities on Kratos Defense and Neo Performance 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 Neo Performance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kratos Defense and Neo Performance.
Diversification Opportunities for Kratos Defense and Neo Performance
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Kratos and Neo is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Kratos Defense Security and Neo Performance Materials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Neo Performance Materials 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 Neo Performance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Neo Performance Materials has no effect on the direction of Kratos Defense i.e., Kratos Defense and Neo Performance go up and down completely randomly.
Pair Corralation between Kratos Defense and Neo Performance
Given the investment horizon of 90 days Kratos Defense Security is expected to generate 0.87 times more return on investment than Neo Performance. However, Kratos Defense Security is 1.15 times less risky than Neo Performance. It trades about 0.13 of its potential returns per unit of risk. Neo Performance Materials is currently generating about 0.1 per unit of risk. If you would invest 2,829 in Kratos Defense Security on September 11, 2025 and sell it today you would earn a total of 4,862 from holding Kratos Defense Security or generate 171.86% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 99.6% |
| Values | Daily Returns |
Kratos Defense Security vs. Neo Performance Materials
Performance |
| Timeline |
| Kratos Defense Security |
| Neo Performance Materials |
Kratos Defense and Neo Performance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kratos Defense and Neo Performance
The main advantage of trading using opposite Kratos Defense and Neo Performance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kratos Defense position performs unexpectedly, Neo Performance 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 Neo Performance will offset losses from the drop in Neo Performance's long position.| Kratos Defense vs. Woodward | Kratos Defense vs. Textron | Kratos Defense vs. AeroVironment | Kratos Defense vs. Huntington Ingalls Industries |
| Neo Performance vs. Arkema SA ADR | Neo Performance vs. Johnson Matthey Plc | Neo Performance vs. Croda International Plc | Neo Performance vs. Sumitomo Chemical Co |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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