Correlation Between Kratos Defense and SPS Commerce
Can any of the company-specific risk be diversified away by investing in both Kratos Defense and SPS Commerce 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 SPS Commerce 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 SPS Commerce, you can compare the effects of market volatilities on Kratos Defense and SPS Commerce 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 SPS Commerce. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kratos Defense and SPS Commerce.
Diversification Opportunities for Kratos Defense and SPS Commerce
-0.39 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Kratos and SPS is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Kratos Defense Security and SPS Commerce in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPS Commerce 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 SPS Commerce. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SPS Commerce has no effect on the direction of Kratos Defense i.e., Kratos Defense and SPS Commerce go up and down completely randomly.
Pair Corralation between Kratos Defense and SPS Commerce
Given the investment horizon of 90 days Kratos Defense Security is expected to generate 1.73 times more return on investment than SPS Commerce. However, Kratos Defense is 1.73 times more volatile than SPS Commerce. It trades about 0.28 of its potential returns per unit of risk. SPS Commerce is currently generating about -0.01 per unit of risk. If you would invest 3,350 in Kratos Defense Security on April 28, 2025 and sell it today you would earn a total of 2,627 from holding Kratos Defense Security or generate 78.42% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Kratos Defense Security vs. SPS Commerce
Performance |
| Timeline |
| Kratos Defense Security |
| SPS Commerce |
Kratos Defense and SPS Commerce Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kratos Defense and SPS Commerce
The main advantage of trading using opposite Kratos Defense and SPS Commerce positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kratos Defense position performs unexpectedly, SPS Commerce 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 SPS Commerce will offset losses from the drop in SPS Commerce's long position.| Kratos Defense vs. L3Harris Technologies | Kratos Defense vs. AeroVironment | Kratos Defense vs. Mercury Systems | Kratos Defense vs. Textron |
| SPS Commerce vs. Qualys Inc | SPS Commerce vs. NetScout Systems | SPS Commerce vs. Evertec | SPS Commerce vs. CSG Systems International |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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