Correlation Between Ammo Preferred and Kratos Defense

Can any of the company-specific risk be diversified away by investing in both Ammo Preferred and Kratos Defense 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 Ammo Preferred and Kratos Defense into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Ammo Preferred and Kratos Defense Security, you can compare the effects of market volatilities on Ammo Preferred and Kratos Defense 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 Ammo Preferred with a short position of Kratos Defense. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ammo Preferred and Kratos Defense.

Diversification Opportunities for Ammo Preferred and Kratos Defense

-0.46

Correlation Coefficient

Ammo Preferred  Kratos Defense

Very good diversification

The 3 months correlation between Ammo and Kratos is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding Ammo Preferred and Kratos Defense Security in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kratos Defense Security and Ammo Preferred 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 Ammo Preferred are associated (or correlated) with Kratos Defense. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kratos Defense Security has no effect on the direction of Ammo Preferred i.e., Ammo Preferred and Kratos Defense go up and down completely randomly.

Pair Corralation between Ammo Preferred and Kratos Defense

Assuming the 90 days horizon Ammo Preferred is expected to under-perform the Kratos Defense. In addition to that, Ammo Preferred is 1.67 times more volatile than Kratos Defense Security. It trades about -0.05 of its total potential returns per unit of risk. Kratos Defense Security is currently generating about 0.13 per unit of volatility. If you would invest  2,249  in Kratos Defense Security on September 13, 2024 and sell it today you would earn a total of  485.00  from holding Kratos Defense Security or generate 21.57% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Ammo Preferred  vs.  Kratos Defense Security

Ammo Preferred

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ammo Preferred has generated negative risk-adjusted returns adding no value to investors with long positions. Even with abnormal performance in the last few months, the Preferred Stock's basic indicators remain relatively invariable which may send shares a bit higher in January 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Kratos Defense Security

Risk-Adjusted Performance

10 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Kratos Defense Security are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Kratos Defense unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Ammo Preferred and Kratos Defense

The main advantage of trading using opposite Ammo Preferred and Kratos Defense positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ammo Preferred position performs unexpectedly, Kratos Defense 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 Kratos Defense will offset losses from the drop in Kratos Defense's long position.

The idea behind Ammo Preferred and Kratos Defense Security pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.