Correlation Between Elbit Systems and Lockheed Martin
Can any of the company-specific risk be diversified away by investing in both Elbit Systems 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 Elbit Systems and Lockheed Martin into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Elbit Systems and Lockheed Martin, you can compare the effects of market volatilities on Elbit Systems 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 Elbit Systems with a short position of Lockheed Martin. Check out your portfolio center. Please also check ongoing floating volatility patterns of Elbit Systems and Lockheed Martin.
Diversification Opportunities for Elbit Systems and Lockheed Martin
-0.52 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Elbit and Lockheed is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding Elbit Systems and Lockheed Martin in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lockheed Martin and Elbit Systems 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 Elbit Systems 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 Elbit Systems i.e., Elbit Systems and Lockheed Martin go up and down completely randomly.
Pair Corralation between Elbit Systems and Lockheed Martin
Given the investment horizon of 90 days Elbit Systems is expected to generate 2.01 times more return on investment than Lockheed Martin. However, Elbit Systems is 2.01 times more volatile than Lockheed Martin. It trades about 0.35 of its potential returns per unit of risk. Lockheed Martin is currently generating about -0.14 per unit of risk. If you would invest 21,033 in Elbit Systems on August 26, 2024 and sell it today you would earn a total of 3,978 from holding Elbit Systems or generate 18.91% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Elbit Systems vs. Lockheed Martin
Performance |
| Timeline |
| Elbit Systems |
| Lockheed Martin |
Elbit Systems and Lockheed Martin Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Elbit Systems and Lockheed Martin
The main advantage of trading using opposite Elbit Systems and Lockheed Martin positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Elbit Systems 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.| Elbit Systems vs. Redwire Corp | Elbit Systems vs. Sidus Space | Elbit Systems vs. Rocket Lab USA | Elbit Systems vs. Momentus |
| Lockheed Martin vs. Northrop Grumman | Lockheed Martin vs. General Dynamics | Lockheed Martin vs. L3Harris Technologies | Lockheed Martin vs. The Boeing |
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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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