Correlation Between DigitalOcean Holdings and Lockheed Martin
Can any of the company-specific risk be diversified away by investing in both DigitalOcean Holdings 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 DigitalOcean Holdings and Lockheed Martin into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between DigitalOcean Holdings and Lockheed Martin, you can compare the effects of market volatilities on DigitalOcean Holdings 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 DigitalOcean Holdings with a short position of Lockheed Martin. Check out your portfolio center. Please also check ongoing floating volatility patterns of DigitalOcean Holdings and Lockheed Martin.
Diversification Opportunities for DigitalOcean Holdings and Lockheed Martin
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between DigitalOcean and Lockheed is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding DigitalOcean Holdings and Lockheed Martin in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lockheed Martin and DigitalOcean Holdings 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 DigitalOcean Holdings 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 DigitalOcean Holdings i.e., DigitalOcean Holdings and Lockheed Martin go up and down completely randomly.
Pair Corralation between DigitalOcean Holdings and Lockheed Martin
Given the investment horizon of 90 days DigitalOcean Holdings is expected to generate 1.78 times more return on investment than Lockheed Martin. However, DigitalOcean Holdings is 1.78 times more volatile than Lockheed Martin. It trades about 0.08 of its potential returns per unit of risk. Lockheed Martin is currently generating about -0.4 per unit of risk. If you would invest 3,806 in DigitalOcean Holdings on September 14, 2024 and sell it today you would earn a total of 131.00 from holding DigitalOcean Holdings or generate 3.44% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
DigitalOcean Holdings vs. Lockheed Martin
Performance |
| Timeline |
| DigitalOcean Holdings |
| Lockheed Martin |
DigitalOcean Holdings and Lockheed Martin Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with DigitalOcean Holdings and Lockheed Martin
The main advantage of trading using opposite DigitalOcean Holdings and Lockheed Martin positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DigitalOcean Holdings 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.| DigitalOcean Holdings vs. Crowdstrike Holdings | DigitalOcean Holdings vs. Zscaler | DigitalOcean Holdings vs. Okta Inc | DigitalOcean Holdings vs. Uipath Inc |
| Lockheed Martin vs. Novocure | Lockheed Martin vs. HubSpot | Lockheed Martin vs. DigitalOcean Holdings | Lockheed Martin vs. Appian Corp |
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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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