Correlation Between Lockheed Martin and Rio Tinto
Can any of the company-specific risk be diversified away by investing in both Lockheed Martin and Rio Tinto 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 Lockheed Martin and Rio Tinto into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lockheed Martin Corp and Rio Tinto PLC, you can compare the effects of market volatilities on Lockheed Martin and Rio Tinto 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 Lockheed Martin with a short position of Rio Tinto. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lockheed Martin and Rio Tinto.
Diversification Opportunities for Lockheed Martin and Rio Tinto
0.95 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Lockheed and Rio is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding Lockheed Martin Corp and Rio Tinto PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rio Tinto PLC and Lockheed Martin 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 Lockheed Martin Corp are associated (or correlated) with Rio Tinto. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rio Tinto PLC has no effect on the direction of Lockheed Martin i.e., Lockheed Martin and Rio Tinto go up and down completely randomly.
Pair Corralation between Lockheed Martin and Rio Tinto
Assuming the 90 days trading horizon Lockheed Martin Corp is expected to generate 0.87 times more return on investment than Rio Tinto. However, Lockheed Martin Corp is 1.15 times less risky than Rio Tinto. It trades about 0.33 of its potential returns per unit of risk. Rio Tinto PLC is currently generating about 0.24 per unit of risk. If you would invest 3,360,000 in Lockheed Martin Corp on November 29, 2025 and sell it today you would earn a total of 1,402,000 from holding Lockheed Martin Corp or generate 41.73% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 98.39% |
| Values | Daily Returns |
Lockheed Martin Corp vs. Rio Tinto PLC
Performance |
| Timeline |
| Lockheed Martin Corp |
| Rio Tinto PLC |
Lockheed Martin and Rio Tinto Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lockheed Martin and Rio Tinto
The main advantage of trading using opposite Lockheed Martin and Rio Tinto positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lockheed Martin position performs unexpectedly, Rio Tinto 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 Rio Tinto will offset losses from the drop in Rio Tinto's long position.| Lockheed Martin vs. Compania de Transporte | Lockheed Martin vs. IRSA Inversiones y | Lockheed Martin vs. Procter Gamble DRC | Lockheed Martin vs. Ambev SA |
| Rio Tinto vs. Vista Energy SAB | Rio Tinto vs. Lockheed Martin Corp | Rio Tinto vs. Apple Inc DRC | Rio Tinto vs. Ambev SA |
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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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