Correlation Between Kratos Defense and Simt Mid
Can any of the company-specific risk be diversified away by investing in both Kratos Defense and Simt Mid 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 Simt Mid 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 Simt Mid Cap, you can compare the effects of market volatilities on Kratos Defense and Simt Mid 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 Simt Mid. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kratos Defense and Simt Mid.
Diversification Opportunities for Kratos Defense and Simt Mid
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Kratos and Simt is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Kratos Defense Security and Simt Mid Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Simt Mid Cap 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 Simt Mid. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Simt Mid Cap has no effect on the direction of Kratos Defense i.e., Kratos Defense and Simt Mid go up and down completely randomly.
Pair Corralation between Kratos Defense and Simt Mid
Given the investment horizon of 90 days Kratos Defense Security is expected to generate 3.46 times more return on investment than Simt Mid. However, Kratos Defense is 3.46 times more volatile than Simt Mid Cap. It trades about 0.24 of its potential returns per unit of risk. Simt Mid Cap is currently generating about 0.23 per unit of risk. If you would invest 3,299 in Kratos Defense Security on April 14, 2025 and sell it today you would earn a total of 1,872 from holding Kratos Defense Security or generate 56.74% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Kratos Defense Security vs. Simt Mid Cap
Performance |
| Timeline |
| Kratos Defense Security |
| Simt Mid Cap |
Kratos Defense and Simt Mid Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kratos Defense and Simt Mid
The main advantage of trading using opposite Kratos Defense and Simt Mid positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kratos Defense position performs unexpectedly, Simt Mid 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 Simt Mid will offset losses from the drop in Simt Mid's long position.| Kratos Defense vs. L3Harris Technologies | Kratos Defense vs. AeroVironment | Kratos Defense vs. Mercury Systems | Kratos Defense vs. Textron |
| Simt Mid vs. Simt Mid Cap | Simt Mid vs. Simt Mid Cap | Simt Mid vs. Victory Sycamore Established | Simt Mid vs. Jpmorgan Value Advantage |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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