Correlation Between Kratos Defense and Mid Cap
Can any of the company-specific risk be diversified away by investing in both Kratos Defense and Mid Cap 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 Mid Cap 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 Mid Cap Growth, you can compare the effects of market volatilities on Kratos Defense and Mid Cap 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 Mid Cap. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kratos Defense and Mid Cap.
Diversification Opportunities for Kratos Defense and Mid Cap
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Kratos and Mid is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Kratos Defense Security and Mid Cap Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mid Cap Growth 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 Mid Cap. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mid Cap Growth has no effect on the direction of Kratos Defense i.e., Kratos Defense and Mid Cap go up and down completely randomly.
Pair Corralation between Kratos Defense and Mid Cap
Given the investment horizon of 90 days Kratos Defense Security is expected to generate 6.53 times more return on investment than Mid Cap. However, Kratos Defense is 6.53 times more volatile than Mid Cap Growth. It trades about 0.3 of its potential returns per unit of risk. Mid Cap Growth is currently generating about 0.3 per unit of risk. If you would invest 4,323 in Kratos Defense Security on April 18, 2025 and sell it today you would earn a total of 1,568 from holding Kratos Defense Security or generate 36.27% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Kratos Defense Security vs. Mid Cap Growth
Performance |
| Timeline |
| Kratos Defense Security |
| Mid Cap Growth |
Kratos Defense and Mid Cap Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kratos Defense and Mid Cap
The main advantage of trading using opposite Kratos Defense and Mid Cap positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kratos Defense position performs unexpectedly, Mid Cap 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 Mid Cap will offset losses from the drop in Mid Cap's long position.| Kratos Defense vs. L3Harris Technologies | Kratos Defense vs. AeroVironment | Kratos Defense vs. Mercury Systems | Kratos Defense vs. Textron |
| Mid Cap vs. Touchstone Mid Cap | Mid Cap vs. Federated Mdt Small | Mid Cap vs. Harding Loevner International | Mid Cap vs. Sterling Capital Equity |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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