Correlation Between Lockheed Martin and ATP
Can any of the company-specific risk be diversified away by investing in both Lockheed Martin and ATP 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 ATP into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lockheed Martin and ATP, you can compare the effects of market volatilities on Lockheed Martin and ATP 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 ATP. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lockheed Martin and ATP.
Diversification Opportunities for Lockheed Martin and ATP
0.3 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Lockheed and ATP is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding Lockheed Martin and ATP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ATP 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 ATP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ATP has no effect on the direction of Lockheed Martin i.e., Lockheed Martin and ATP go up and down completely randomly.
Pair Corralation between Lockheed Martin and ATP
Considering the 90-day investment horizon Lockheed Martin is expected to under-perform the ATP. But the stock apears to be less risky and, when comparing its historical volatility, Lockheed Martin is 6.14 times less risky than ATP. The stock trades about -0.19 of its potential returns per unit of risk. The ATP is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 0.00 in ATP on August 24, 2024 and sell it today you would earn a total of 0.00 from holding ATP or generate 16.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lockheed Martin vs. ATP
Performance |
| Timeline |
| Lockheed Martin |
| ATP |
Lockheed Martin and ATP Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lockheed Martin and ATP
The main advantage of trading using opposite Lockheed Martin and ATP positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lockheed Martin position performs unexpectedly, ATP 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 ATP will offset losses from the drop in ATP's long position.| Lockheed Martin vs. Northrop Grumman | Lockheed Martin vs. General Dynamics | Lockheed Martin vs. L3Harris Technologies | Lockheed Martin vs. The Boeing |
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.
Other Complementary Tools
| Economic Indicators Top statistical indicators that provide insights into how an economy is performing | |
| Portfolio Manager State of the art Portfolio Manager to monitor and improve performance of your invested capital | |
| Latest Portfolios Quick portfolio dashboard that showcases your latest portfolios | |
| Alpha Finder Use alpha and beta coefficients to find investment opportunities after accounting for the risk | |
| Risk-Return Analysis View associations between returns expected from investment and the risk you assume |