Correlation Between Kratos Defense and Splunk

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

Diversification Opportunities for Kratos Defense and Splunk

0.0

Correlation Coefficient

Kratos Defense  Splunk

Pay attention - limited upside

The 3 months correlation between Kratos and Splunk is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Kratos Defense Security and Splunk Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Splunk Inc 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 Splunk. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Splunk Inc has no effect on the direction of Kratos Defense i.e., Kratos Defense and Splunk go up and down completely randomly.

Pair Corralation between Kratos Defense and Splunk

If you would invest  3,588  in Kratos Defense Security on May 3, 2025 and sell it today you would earn a total of  2,282  from holding Kratos Defense Security or generate 63.6% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Kratos Defense Security  vs.  Splunk Inc

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 19 (%) 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.

Splunk Inc

Risk-Adjusted Performance

Very Weak

Over the last 90 days Splunk Inc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent essential indicators, Splunk is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Kratos Defense and Splunk

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

The idea behind Kratos Defense Security and Splunk Inc 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 Global Correlations module to find global opportunities by holding instruments from different markets.