Correlation Between Kratos Defense and Commodities Strategy
Can any of the company-specific risk be diversified away by investing in both Kratos Defense and Commodities Strategy 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 Commodities Strategy 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 Commodities Strategy Fund, you can compare the effects of market volatilities on Kratos Defense and Commodities Strategy 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 Commodities Strategy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kratos Defense and Commodities Strategy.
Diversification Opportunities for Kratos Defense and Commodities Strategy
0.4 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Kratos and Commodities is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Kratos Defense Security and Commodities Strategy Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Commodities Strategy 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 Commodities Strategy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Commodities Strategy has no effect on the direction of Kratos Defense i.e., Kratos Defense and Commodities Strategy go up and down completely randomly.
Pair Corralation between Kratos Defense and Commodities Strategy
Given the investment horizon of 90 days Kratos Defense Security is expected to generate 3.1 times more return on investment than Commodities Strategy. However, Kratos Defense is 3.1 times more volatile than Commodities Strategy Fund. It trades about 0.31 of its potential returns per unit of risk. Commodities Strategy Fund is currently generating about 0.08 per unit of risk. If you would invest 3,192 in Kratos Defense Security on April 20, 2025 and sell it today you would earn a total of 2,720 from holding Kratos Defense Security or generate 85.21% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Kratos Defense Security vs. Commodities Strategy Fund
Performance |
| Timeline |
| Kratos Defense Security |
| Commodities Strategy |
Kratos Defense and Commodities Strategy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kratos Defense and Commodities Strategy
The main advantage of trading using opposite Kratos Defense and Commodities Strategy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kratos Defense position performs unexpectedly, Commodities Strategy 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 Commodities Strategy will offset losses from the drop in Commodities Strategy's long position.| Kratos Defense vs. L3Harris Technologies | Kratos Defense vs. AeroVironment | Kratos Defense vs. Mercury Systems | Kratos Defense vs. Textron |
| Commodities Strategy vs. Basic Materials Fund | Commodities Strategy vs. Energy Services Fund | Commodities Strategy vs. Precious Metals Fund |
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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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