Correlation Between Eve Holding and Lockheed Martin
Can any of the company-specific risk be diversified away by investing in both Eve Holding 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 Eve Holding and Lockheed Martin into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Eve Holding and Lockheed Martin, you can compare the effects of market volatilities on Eve Holding 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 Eve Holding with a short position of Lockheed Martin. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eve Holding and Lockheed Martin.
Diversification Opportunities for Eve Holding and Lockheed Martin
0.54 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Eve and Lockheed is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Eve Holding and Lockheed Martin in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lockheed Martin and Eve Holding 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 Eve Holding 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 Eve Holding i.e., Eve Holding and Lockheed Martin go up and down completely randomly.
Pair Corralation between Eve Holding and Lockheed Martin
Given the investment horizon of 90 days Eve Holding is expected to generate 3.21 times more return on investment than Lockheed Martin. However, Eve Holding is 3.21 times more volatile than Lockheed Martin. It trades about -0.03 of its potential returns per unit of risk. Lockheed Martin is currently generating about -0.19 per unit of risk. If you would invest 342.00 in Eve Holding on August 24, 2024 and sell it today you would lose (13.00) from holding Eve Holding or give up 3.8% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Eve Holding vs. Lockheed Martin
Performance |
| Timeline |
| Eve Holding |
| Lockheed Martin |
Eve Holding and Lockheed Martin Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Eve Holding and Lockheed Martin
The main advantage of trading using opposite Eve Holding and Lockheed Martin positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eve Holding 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.| Eve Holding vs. Heico | Eve Holding vs. Mercury Systems | Eve Holding vs. AeroVironment | Eve Holding vs. Howmet Aerospace |
| 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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