Correlation Between Lockheed Martin and Martin Marietta
Can any of the company-specific risk be diversified away by investing in both Lockheed Martin and Martin Marietta 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 Martin Marietta into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lockheed Martin and Martin Marietta Materials, you can compare the effects of market volatilities on Lockheed Martin and Martin Marietta 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 Martin Marietta. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lockheed Martin and Martin Marietta.
Diversification Opportunities for Lockheed Martin and Martin Marietta
-0.51 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Lockheed and Martin is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding Lockheed Martin and Martin Marietta Materials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Martin Marietta Materials 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 Martin Marietta. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Martin Marietta Materials has no effect on the direction of Lockheed Martin i.e., Lockheed Martin and Martin Marietta go up and down completely randomly.
Pair Corralation between Lockheed Martin and Martin Marietta
Assuming the 90 days trading horizon Lockheed Martin is expected to under-perform the Martin Marietta. In addition to that, Lockheed Martin is 1.1 times more volatile than Martin Marietta Materials. It trades about -0.44 of its total potential returns per unit of risk. Martin Marietta Materials is currently generating about -0.14 per unit of volatility. If you would invest 1,224,727 in Martin Marietta Materials on September 12, 2024 and sell it today you would lose (44,893) from holding Martin Marietta Materials or give up 3.67% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lockheed Martin vs. Martin Marietta Materials
Performance |
| Timeline |
| Lockheed Martin |
| Martin Marietta Materials |
Lockheed Martin and Martin Marietta Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lockheed Martin and Martin Marietta
The main advantage of trading using opposite Lockheed Martin and Martin Marietta positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lockheed Martin position performs unexpectedly, Martin Marietta 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 Martin Marietta will offset losses from the drop in Martin Marietta's long position.| Lockheed Martin vs. Prudential Financial | Lockheed Martin vs. Delta Air Lines | Lockheed Martin vs. Deutsche Bank Aktiengesellschaft | Lockheed Martin vs. Grupo Sports World |
| Martin Marietta vs. New Oriental Education | Martin Marietta vs. DXC Technology | Martin Marietta vs. Micron Technology | Martin Marietta vs. First Majestic Silver |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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