Correlation Between Kratos Defense and Icon Long/short

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

Diversification Opportunities for Kratos Defense and Icon Long/short

0.6

Correlation Coefficient

Kratos Defense  Icon Long/short

Poor diversification

The 3 months correlation between Kratos and ICON is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Kratos Defense Security and Icon Longshort Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Icon Long/short 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 Icon Long/short. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Icon Long/short has no effect on the direction of Kratos Defense i.e., Kratos Defense and Icon Long/short go up and down completely randomly.

Pair Corralation between Kratos Defense and Icon Long/short

Given the investment horizon of 90 days Kratos Defense Security is expected to generate 3.29 times more return on investment than Icon Long/short. However, Kratos Defense is 3.29 times more volatile than Icon Longshort Fund. It trades about 0.05 of its potential returns per unit of risk. Icon Longshort Fund is currently generating about -0.1 per unit of risk. If you would invest  8,077  in Kratos Defense Security on July 21, 2025 and sell it today you would earn a total of  235.00  from holding Kratos Defense Security or generate 2.91% 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.  Icon Longshort Fund

Kratos Defense Security

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Kratos Defense Security are ranked lower than 14 (%) 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.

Icon Long/short

Risk-Adjusted Performance

Mild

Compared to the overall equity markets, risk-adjusted returns on investments in Icon Longshort Fund are ranked lower than 6 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Icon Long/short 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 Icon Long/short

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

The idea behind Kratos Defense Security and Icon Longshort Fund 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.