Correlation Between ECHO INVESTMENT and Lockheed Martin
Can any of the company-specific risk be diversified away by investing in both ECHO INVESTMENT and Lockheed Martin 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 ECHO INVESTMENT and Lockheed Martin into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ECHO INVESTMENT ZY and Lockheed Martin, you can compare the effects of market volatilities on ECHO INVESTMENT and Lockheed Martin 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 ECHO INVESTMENT with a short position of Lockheed Martin. Check out your portfolio center. Please also check ongoing floating volatility patterns of ECHO INVESTMENT and Lockheed Martin.
Diversification Opportunities for ECHO INVESTMENT and Lockheed Martin
-0.23 | Correlation Coefficient |
Very good diversification
The 3 months correlation between ECHO and Lockheed is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding ECHO INVESTMENT ZY and Lockheed Martin in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lockheed Martin and ECHO INVESTMENT 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 ECHO INVESTMENT ZY are associated (or correlated) with Lockheed Martin. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lockheed Martin has no effect on the direction of ECHO INVESTMENT i.e., ECHO INVESTMENT and Lockheed Martin go up and down completely randomly.
Pair Corralation between ECHO INVESTMENT and Lockheed Martin
Assuming the 90 days horizon ECHO INVESTMENT ZY is expected to generate 0.8 times more return on investment than Lockheed Martin. However, ECHO INVESTMENT ZY is 1.25 times less risky than Lockheed Martin. It trades about -0.03 of its potential returns per unit of risk. Lockheed Martin is currently generating about -0.24 per unit of risk. If you would invest 102.00 in ECHO INVESTMENT ZY on September 13, 2024 and sell it today you would lose (1.00) from holding ECHO INVESTMENT ZY or give up 0.98% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
ECHO INVESTMENT ZY vs. Lockheed Martin
Performance |
| Timeline |
| ECHO INVESTMENT ZY |
| Lockheed Martin |
ECHO INVESTMENT and Lockheed Martin Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ECHO INVESTMENT and Lockheed Martin
The main advantage of trading using opposite ECHO INVESTMENT and Lockheed Martin positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ECHO INVESTMENT position performs unexpectedly, Lockheed Martin 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 Lockheed Martin will offset losses from the drop in Lockheed Martin's long position.| ECHO INVESTMENT vs. Spirent Communications plc | ECHO INVESTMENT vs. ASURE SOFTWARE | ECHO INVESTMENT vs. Charter Communications | ECHO INVESTMENT vs. Zijin Mining Group |
| Lockheed Martin vs. ECHO INVESTMENT ZY | Lockheed Martin vs. EAT WELL INVESTMENT | Lockheed Martin vs. MGIC INVESTMENT | Lockheed Martin vs. WisdomTree Investments |
Check out your portfolio center.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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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