Correlation Between Lockheed Martin and Applied Industrial
Can any of the company-specific risk be diversified away by investing in both Lockheed Martin and Applied Industrial 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 Applied Industrial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lockheed Martin and Applied Industrial Technologies, you can compare the effects of market volatilities on Lockheed Martin and Applied Industrial 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 Applied Industrial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lockheed Martin and Applied Industrial.
Diversification Opportunities for Lockheed Martin and Applied Industrial
0.48 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Lockheed and Applied is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Lockheed Martin and Applied Industrial Technologie in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Applied Industrial 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 Applied Industrial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Applied Industrial has no effect on the direction of Lockheed Martin i.e., Lockheed Martin and Applied Industrial go up and down completely randomly.
Pair Corralation between Lockheed Martin and Applied Industrial
Considering the 90-day investment horizon Lockheed Martin is expected to under-perform the Applied Industrial. In addition to that, Lockheed Martin is 1.52 times more volatile than Applied Industrial Technologies. It trades about -0.29 of its total potential returns per unit of risk. Applied Industrial Technologies is currently generating about 0.1 per unit of volatility. If you would invest 25,739 in Applied Industrial Technologies on November 18, 2024 and sell it today you would earn a total of 795.00 from holding Applied Industrial Technologies or generate 3.09% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lockheed Martin vs. Applied Industrial Technologie
Performance |
| Timeline |
| Lockheed Martin |
| Applied Industrial |
Lockheed Martin and Applied Industrial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lockheed Martin and Applied Industrial
The main advantage of trading using opposite Lockheed Martin and Applied Industrial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lockheed Martin position performs unexpectedly, Applied Industrial 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 Applied Industrial will offset losses from the drop in Applied Industrial's long position.| Lockheed Martin vs. Northrop Grumman | Lockheed Martin vs. General Dynamics | Lockheed Martin vs. L3Harris Technologies | Lockheed Martin vs. The Boeing |
| Applied Industrial vs. Core Main | Applied Industrial vs. WW Grainger | Applied Industrial vs. DXP Enterprises | Applied Industrial vs. SiteOne Landscape Supply |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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