Correlation Between Lockheed Martin and FibraHotel
Can any of the company-specific risk be diversified away by investing in both Lockheed Martin and FibraHotel 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 FibraHotel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lockheed Martin and FibraHotel, you can compare the effects of market volatilities on Lockheed Martin and FibraHotel 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 FibraHotel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lockheed Martin and FibraHotel.
Diversification Opportunities for Lockheed Martin and FibraHotel
-0.59 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Lockheed and FibraHotel is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding Lockheed Martin and FibraHotel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FibraHotel 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 are associated (or correlated) with FibraHotel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FibraHotel has no effect on the direction of Lockheed Martin i.e., Lockheed Martin and FibraHotel go up and down completely randomly.
Pair Corralation between Lockheed Martin and FibraHotel
Assuming the 90 days trading horizon Lockheed Martin is expected to generate 0.67 times more return on investment than FibraHotel. However, Lockheed Martin is 1.5 times less risky than FibraHotel. It trades about 0.01 of its potential returns per unit of risk. FibraHotel is currently generating about -0.01 per unit of risk. If you would invest 1,094,000 in Lockheed Martin on September 1, 2024 and sell it today you would earn a total of 1,649 from holding Lockheed Martin or generate 0.15% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Lockheed Martin vs. FibraHotel
Performance |
| Timeline |
| Lockheed Martin |
| FibraHotel |
Lockheed Martin and FibraHotel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lockheed Martin and FibraHotel
The main advantage of trading using opposite Lockheed Martin and FibraHotel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lockheed Martin position performs unexpectedly, FibraHotel 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 FibraHotel will offset losses from the drop in FibraHotel's long position.| Lockheed Martin vs. DXC Technology | Lockheed Martin vs. First Majestic Silver | Lockheed Martin vs. Southwest Airlines | Lockheed Martin vs. Verizon Communications |
| FibraHotel vs. GMxico Transportes SAB | FibraHotel vs. Samsung Electronics Co | FibraHotel vs. Micron Technology | FibraHotel vs. CVS Health |
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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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