Correlation Between Lockheed Martin and Prudential Financial
Can any of the company-specific risk be diversified away by investing in both Lockheed Martin and Prudential Financial 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 Prudential Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lockheed Martin and Prudential Financial, you can compare the effects of market volatilities on Lockheed Martin and Prudential Financial 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 Prudential Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lockheed Martin and Prudential Financial.
Diversification Opportunities for Lockheed Martin and Prudential Financial
-0.57 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Lockheed and Prudential is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding Lockheed Martin and Prudential Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Prudential Financial 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 Prudential Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Prudential Financial has no effect on the direction of Lockheed Martin i.e., Lockheed Martin and Prudential Financial go up and down completely randomly.
Pair Corralation between Lockheed Martin and Prudential Financial
Assuming the 90 days trading horizon Lockheed Martin is expected to generate 1.12 times less return on investment than Prudential Financial. But when comparing it to its historical volatility, Lockheed Martin is 1.23 times less risky than Prudential Financial. It trades about 0.02 of its potential returns per unit of risk. Prudential Financial is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 180,843 in Prudential Financial on September 12, 2024 and sell it today you would earn a total of 20,657 from holding Prudential Financial or generate 11.42% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lockheed Martin vs. Prudential Financial
Performance |
| Timeline |
| Lockheed Martin |
| Prudential Financial |
Lockheed Martin and Prudential Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lockheed Martin and Prudential Financial
The main advantage of trading using opposite Lockheed Martin and Prudential Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lockheed Martin position performs unexpectedly, Prudential Financial 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 Prudential Financial will offset losses from the drop in Prudential Financial'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 |
| Prudential Financial vs. The Select Sector | Prudential Financial vs. Promotora y Operadora | Prudential Financial vs. iShares Global Timber | Prudential Financial vs. SPDR Series Trust |
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 Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
Other Complementary Tools
| Odds Of Bankruptcy Get analysis of equity chance of financial distress in the next 2 years | |
| Portfolio Volatility Check portfolio volatility and analyze historical return density to properly model market risk | |
| Cryptocurrency Center Build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency | |
| Commodity Directory Find actively traded commodities issued by global exchanges | |
| ETF Categories List of ETF categories grouped based on various criteria, such as the investment strategy or type of investments |