Correlation Between Avis Budget and Lockheed Martin
Can any of the company-specific risk be diversified away by investing in both Avis Budget 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 Avis Budget and Lockheed Martin into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Avis Budget Group and Lockheed Martin, you can compare the effects of market volatilities on Avis Budget 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 Avis Budget with a short position of Lockheed Martin. Check out your portfolio center. Please also check ongoing floating volatility patterns of Avis Budget and Lockheed Martin.
Diversification Opportunities for Avis Budget and Lockheed Martin
-0.15 | Correlation Coefficient |
Good diversification
The 3 months correlation between Avis and Lockheed is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding Avis Budget Group and Lockheed Martin in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lockheed Martin and Avis Budget 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 Avis Budget Group 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 Avis Budget i.e., Avis Budget and Lockheed Martin go up and down completely randomly.
Pair Corralation between Avis Budget and Lockheed Martin
Assuming the 90 days trading horizon Avis Budget Group is expected to under-perform the Lockheed Martin. In addition to that, Avis Budget is 1.96 times more volatile than Lockheed Martin. It trades about -0.03 of its total potential returns per unit of risk. Lockheed Martin is currently generating about 0.09 per unit of volatility. If you would invest 737,763 in Lockheed Martin on September 14, 2024 and sell it today you would earn a total of 276,437 from holding Lockheed Martin or generate 37.47% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Avis Budget Group vs. Lockheed Martin
Performance |
| Timeline |
| Avis Budget Group |
| Lockheed Martin |
Avis Budget and Lockheed Martin Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Avis Budget and Lockheed Martin
The main advantage of trading using opposite Avis Budget and Lockheed Martin positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Avis Budget 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.| Avis Budget vs. Applied Materials | Avis Budget vs. Grupo Carso SAB | Avis Budget vs. Southwest Airlines | Avis Budget vs. United Airlines Holdings |
| Lockheed Martin vs. The Boeing | Lockheed Martin vs. General Dynamics | Lockheed Martin vs. Textron | Lockheed Martin vs. Netflix |
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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
Other Complementary Tools
| Portfolio Manager State of the art Portfolio Manager to monitor and improve performance of your invested capital | |
| Economic Indicators Top statistical indicators that provide insights into how an economy is performing | |
| Equity Valuation Check real value of public entities based on technical and fundamental data | |
| Bonds Directory Find actively traded corporate debentures issued by US companies | |
| Latest Portfolios Quick portfolio dashboard that showcases your latest portfolios |