Correlation Between Kratos Defense and Catalyst Insider

Can any of the company-specific risk be diversified away by investing in both Kratos Defense and Catalyst Insider 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 Catalyst Insider 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 Catalyst Insider Income, you can compare the effects of market volatilities on Kratos Defense and Catalyst Insider 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 Catalyst Insider. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kratos Defense and Catalyst Insider.

Diversification Opportunities for Kratos Defense and Catalyst Insider

0.82

Correlation Coefficient

Kratos Defense  Catalyst Insider

Very poor diversification

The 3 months correlation between Kratos and Catalyst is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Kratos Defense Security and Catalyst Insider Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Catalyst Insider Income 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 Catalyst Insider. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Catalyst Insider Income has no effect on the direction of Kratos Defense i.e., Kratos Defense and Catalyst Insider go up and down completely randomly.

Pair Corralation between Kratos Defense and Catalyst Insider

Given the investment horizon of 90 days Kratos Defense Security is expected to generate 39.47 times more return on investment than Catalyst Insider. However, Kratos Defense is 39.47 times more volatile than Catalyst Insider Income. It trades about 0.22 of its potential returns per unit of risk. Catalyst Insider Income is currently generating about 0.21 per unit of risk. If you would invest  3,588  in Kratos Defense Security on May 4, 2025 and sell it today you would earn a total of  2,083  from holding Kratos Defense Security or generate 58.05% 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.  Catalyst Insider Income

Kratos Defense Security

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Kratos Defense Security are ranked lower than 17 (%) 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.

Catalyst Insider Income

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Catalyst Insider Income are ranked lower than 16 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong forward indicators, Catalyst Insider is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Kratos Defense and Catalyst Insider

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

The idea behind Kratos Defense Security and Catalyst Insider Income 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..