Correlation Between BlackRock and Lockheed Martin
Can any of the company-specific risk be diversified away by investing in both BlackRock 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 BlackRock and Lockheed Martin into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BlackRock and Lockheed Martin, you can compare the effects of market volatilities on BlackRock 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 BlackRock with a short position of Lockheed Martin. Check out your portfolio center. Please also check ongoing floating volatility patterns of BlackRock and Lockheed Martin.
Diversification Opportunities for BlackRock and Lockheed Martin
-0.32 | Correlation Coefficient |
Very good diversification
The 3 months correlation between BlackRock and Lockheed is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding BlackRock and Lockheed Martin in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lockheed Martin and BlackRock 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 BlackRock 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 BlackRock i.e., BlackRock and Lockheed Martin go up and down completely randomly.
Pair Corralation between BlackRock and Lockheed Martin
Assuming the 90 days trading horizon BlackRock is expected to generate 1.27 times less return on investment than Lockheed Martin. But when comparing it to its historical volatility, BlackRock is 1.13 times less risky than Lockheed Martin. It trades about 0.01 of its potential returns per unit of risk. Lockheed Martin is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 1,014,200 in Lockheed Martin on October 20, 2024 and sell it today you would earn a total of 1,000.00 from holding Lockheed Martin or generate 0.1% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
BlackRock vs. Lockheed Martin
Performance |
| Timeline |
| BlackRock |
| Lockheed Martin |
BlackRock and Lockheed Martin Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BlackRock and Lockheed Martin
The main advantage of trading using opposite BlackRock and Lockheed Martin positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BlackRock 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.| BlackRock vs. Ameriprise Financial | BlackRock vs. State Street | BlackRock vs. Regional SAB de | BlackRock vs. Vista Oil Gas |
| Lockheed Martin vs. McEwen Mining | Lockheed Martin vs. Grupo Sports World | Lockheed Martin vs. Applied Materials | Lockheed Martin vs. UnitedHealth Group Incorporated |
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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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