Correlation Between Lockheed Martin and HSBC Holdings
Can any of the company-specific risk be diversified away by investing in both Lockheed Martin and HSBC Holdings 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 HSBC Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lockheed Martin and HSBC Holdings plc, you can compare the effects of market volatilities on Lockheed Martin and HSBC Holdings 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 HSBC Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lockheed Martin and HSBC Holdings.
Diversification Opportunities for Lockheed Martin and HSBC Holdings
-0.58 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Lockheed and HSBC is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding Lockheed Martin and HSBC Holdings plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HSBC Holdings 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 are associated (or correlated) with HSBC Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HSBC Holdings plc has no effect on the direction of Lockheed Martin i.e., Lockheed Martin and HSBC Holdings go up and down completely randomly.
Pair Corralation between Lockheed Martin and HSBC Holdings
If you would invest 1,014,200 in Lockheed Martin on October 20, 2024 and sell it today you would earn a total of 1,000.00 from holding Lockheed Martin or generate 0.1% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 95.24% |
| Values | Daily Returns |
Lockheed Martin vs. HSBC Holdings plc
Performance |
| Timeline |
| Lockheed Martin |
| HSBC Holdings plc |
Lockheed Martin and HSBC Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lockheed Martin and HSBC Holdings
The main advantage of trading using opposite Lockheed Martin and HSBC Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lockheed Martin position performs unexpectedly, HSBC Holdings 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 HSBC Holdings will offset losses from the drop in HSBC Holdings' long position.| Lockheed Martin vs. McEwen Mining | Lockheed Martin vs. Grupo Sports World | Lockheed Martin vs. Applied Materials | Lockheed Martin vs. UnitedHealth Group Incorporated |
| HSBC Holdings vs. Prudential Financial | HSBC Holdings vs. Ameriprise Financial | HSBC Holdings vs. Grupo Sports World | HSBC Holdings vs. Martin Marietta Materials |
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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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