Correlation Between Caseys General and Lockheed Martin
Can any of the company-specific risk be diversified away by investing in both Caseys General 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 Caseys General and Lockheed Martin into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Caseys General Stores and Lockheed Martin, you can compare the effects of market volatilities on Caseys General 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 Caseys General with a short position of Lockheed Martin. Check out your portfolio center. Please also check ongoing floating volatility patterns of Caseys General and Lockheed Martin.
Diversification Opportunities for Caseys General and Lockheed Martin
0.05 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Caseys and Lockheed is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Caseys General Stores and Lockheed Martin in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lockheed Martin and Caseys General 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 Caseys General Stores 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 Caseys General i.e., Caseys General and Lockheed Martin go up and down completely randomly.
Pair Corralation between Caseys General and Lockheed Martin
Assuming the 90 days trading horizon Caseys General Stores is expected to generate 0.51 times more return on investment than Lockheed Martin. However, Caseys General Stores is 1.96 times less risky than Lockheed Martin. It trades about 0.18 of its potential returns per unit of risk. Lockheed Martin is currently generating about -0.1 per unit of risk. If you would invest 38,600 in Caseys General Stores on November 4, 2024 and sell it today you would earn a total of 1,800 from holding Caseys General Stores or generate 4.66% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Caseys General Stores vs. Lockheed Martin
Performance |
| Timeline |
| Caseys General Stores |
| Lockheed Martin |
Caseys General and Lockheed Martin Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Caseys General and Lockheed Martin
The main advantage of trading using opposite Caseys General and Lockheed Martin positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Caseys General 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.| Caseys General vs. PennantPark Investment | Caseys General vs. ANGANG STEEL H | Caseys General vs. Olympic Steel | Caseys General vs. CHRYSALIS INVESTMENTS LTD |
| Lockheed Martin vs. LPKF Laser Electronics | Lockheed Martin vs. STORE ELECTRONIC | Lockheed Martin vs. DIVERSIFIED ROYALTY | Lockheed Martin vs. AOI Electronics Co |
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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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