Correlation Between Kratos Defense and Vanguard Total

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

Diversification Opportunities for Kratos Defense and Vanguard Total

0.75

Correlation Coefficient

Kratos Defense  Vanguard Total

Poor diversification

The 3 months correlation between Kratos and Vanguard is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Kratos Defense Security and Vanguard Total Bond in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vanguard Total Bond 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 Vanguard Total. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vanguard Total Bond has no effect on the direction of Kratos Defense i.e., Kratos Defense and Vanguard Total go up and down completely randomly.

Pair Corralation between Kratos Defense and Vanguard Total

Given the investment horizon of 90 days Kratos Defense Security is expected to generate 14.92 times more return on investment than Vanguard Total. However, Kratos Defense is 14.92 times more volatile than Vanguard Total Bond. It trades about 0.22 of its potential returns per unit of risk. Vanguard Total Bond is currently generating about 0.11 per unit of risk. If you would invest  5,950  in Kratos Defense Security on August 4, 2025 and sell it today you would earn a total of  3,110  from holding Kratos Defense Security or generate 52.27% 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.  Vanguard Total Bond

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 unsteady basic indicators, Kratos Defense unveiled solid returns over the last few months and may actually be approaching a breakup point.

Vanguard Total Bond

Risk-Adjusted Performance

Fair

Compared to the overall equity markets, risk-adjusted returns on investments in Vanguard Total Bond are ranked lower than 8 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong forward indicators, Vanguard Total 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 Vanguard Total

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

The idea behind Kratos Defense Security and Vanguard Total Bond 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 AI Portfolio Prophet module to use AI to generate optimal portfolios and find profitable investment opportunities.