Correlation Between HEICO and Lockheed Martin
Can any of the company-specific risk be diversified away by investing in both HEICO 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 HEICO and Lockheed Martin into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between HEICO and Lockheed Martin, you can compare the effects of market volatilities on HEICO 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 HEICO with a short position of Lockheed Martin. Check out your portfolio center. Please also check ongoing floating volatility patterns of HEICO and Lockheed Martin.
Diversification Opportunities for HEICO and Lockheed Martin
-0.13 | Correlation Coefficient |
Good diversification
The 3 months correlation between HEICO and Lockheed is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding HEICO and Lockheed Martin in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lockheed Martin and HEICO 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 HEICO 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 HEICO i.e., HEICO and Lockheed Martin go up and down completely randomly.
Pair Corralation between HEICO and Lockheed Martin
Assuming the 90 days horizon HEICO is expected to generate 1.17 times more return on investment than Lockheed Martin. However, HEICO is 1.17 times more volatile than Lockheed Martin. It trades about 0.23 of its potential returns per unit of risk. Lockheed Martin is currently generating about -0.12 per unit of risk. If you would invest 19,435 in HEICO on August 31, 2024 and sell it today you would earn a total of 1,601 from holding HEICO or generate 8.24% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
HEICO vs. Lockheed Martin
Performance |
| Timeline |
| HEICO |
| Lockheed Martin |
HEICO and Lockheed Martin Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with HEICO and Lockheed Martin
The main advantage of trading using opposite HEICO and Lockheed Martin positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HEICO 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.| HEICO vs. Vertical Aerospace | HEICO vs. Rolls Royce Holdings plc | HEICO vs. Embraer SA ADR | HEICO vs. Rocket Lab USA |
| 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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