Correlation Between HubSpot and Lockheed Martin
Can any of the company-specific risk be diversified away by investing in both HubSpot 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 HubSpot and Lockheed Martin into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between HubSpot and Lockheed Martin, you can compare the effects of market volatilities on HubSpot 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 HubSpot with a short position of Lockheed Martin. Check out your portfolio center. Please also check ongoing floating volatility patterns of HubSpot and Lockheed Martin.
Diversification Opportunities for HubSpot and Lockheed Martin
-0.76 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between HubSpot and Lockheed is -0.76. Overlapping area represents the amount of risk that can be diversified away by holding HubSpot and Lockheed Martin in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lockheed Martin and HubSpot 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 HubSpot 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 HubSpot i.e., HubSpot and Lockheed Martin go up and down completely randomly.
Pair Corralation between HubSpot and Lockheed Martin
Given the investment horizon of 90 days HubSpot is expected to under-perform the Lockheed Martin. But the stock apears to be less risky and, when comparing its historical volatility, HubSpot is 1.21 times less risky than Lockheed Martin. The stock trades about -0.1 of its potential returns per unit of risk. The Lockheed Martin is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 48,902 in Lockheed Martin on October 21, 2024 and sell it today you would earn a total of 130.00 from holding Lockheed Martin or generate 0.27% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
HubSpot vs. Lockheed Martin
Performance |
| Timeline |
| HubSpot |
| Lockheed Martin |
HubSpot and Lockheed Martin Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with HubSpot and Lockheed Martin
The main advantage of trading using opposite HubSpot and Lockheed Martin positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HubSpot 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.The idea behind HubSpot and Lockheed Martin pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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