Correlation Between Huntington Ingalls and Lockheed Martin
Can any of the company-specific risk be diversified away by investing in both Huntington Ingalls 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 Huntington Ingalls and Lockheed Martin into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Huntington Ingalls Industries and Lockheed Martin, you can compare the effects of market volatilities on Huntington Ingalls 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 Huntington Ingalls with a short position of Lockheed Martin. Check out your portfolio center. Please also check ongoing floating volatility patterns of Huntington Ingalls and Lockheed Martin.
Diversification Opportunities for Huntington Ingalls and Lockheed Martin
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Huntington and Lockheed is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Huntington Ingalls Industries and Lockheed Martin in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lockheed Martin and Huntington Ingalls 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 Huntington Ingalls Industries 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 Huntington Ingalls i.e., Huntington Ingalls and Lockheed Martin go up and down completely randomly.
Pair Corralation between Huntington Ingalls and Lockheed Martin
Considering the 90-day investment horizon Huntington Ingalls Industries is expected to generate 1.69 times more return on investment than Lockheed Martin. However, Huntington Ingalls is 1.69 times more volatile than Lockheed Martin. It trades about -0.09 of its potential returns per unit of risk. Lockheed Martin is currently generating about -0.21 per unit of risk. If you would invest 19,497 in Huntington Ingalls Industries on November 18, 2024 and sell it today you would lose (3,370) from holding Huntington Ingalls Industries or give up 17.28% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Huntington Ingalls Industries vs. Lockheed Martin
Performance |
| Timeline |
| Huntington Ingalls |
| Lockheed Martin |
Huntington Ingalls and Lockheed Martin Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Huntington Ingalls and Lockheed Martin
The main advantage of trading using opposite Huntington Ingalls and Lockheed Martin positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Huntington Ingalls 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.| Huntington Ingalls vs. Lockheed Martin | Huntington Ingalls vs. General Dynamics | Huntington Ingalls vs. Raytheon Technologies Corp | Huntington Ingalls vs. L3Harris Technologies |
| 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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