Correlation Between Lockheed Martin and AstraZeneca PLC
Can any of the company-specific risk be diversified away by investing in both Lockheed Martin and AstraZeneca PLC 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 AstraZeneca PLC into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lockheed Martin and AstraZeneca PLC, you can compare the effects of market volatilities on Lockheed Martin and AstraZeneca PLC 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 AstraZeneca PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lockheed Martin and AstraZeneca PLC.
Diversification Opportunities for Lockheed Martin and AstraZeneca PLC
0.34 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Lockheed and AstraZeneca is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Lockheed Martin and AstraZeneca PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AstraZeneca 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 AstraZeneca PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AstraZeneca PLC has no effect on the direction of Lockheed Martin i.e., Lockheed Martin and AstraZeneca PLC go up and down completely randomly.
Pair Corralation between Lockheed Martin and AstraZeneca PLC
Considering the 90-day investment horizon Lockheed Martin is expected to generate 0.51 times more return on investment than AstraZeneca PLC. However, Lockheed Martin is 1.95 times less risky than AstraZeneca PLC. It trades about -0.2 of its potential returns per unit of risk. AstraZeneca PLC is currently generating about -0.2 per unit of risk. If you would invest 55,517 in Lockheed Martin on August 27, 2024 and sell it today you would lose (3,328) from holding Lockheed Martin or give up 5.99% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lockheed Martin vs. AstraZeneca PLC
Performance |
| Timeline |
| Lockheed Martin |
| AstraZeneca PLC |
Lockheed Martin and AstraZeneca PLC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lockheed Martin and AstraZeneca PLC
The main advantage of trading using opposite Lockheed Martin and AstraZeneca PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lockheed Martin position performs unexpectedly, AstraZeneca PLC 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 AstraZeneca PLC will offset losses from the drop in AstraZeneca PLC's long position.| Lockheed Martin vs. Northrop Grumman | Lockheed Martin vs. General Dynamics | Lockheed Martin vs. L3Harris Technologies | Lockheed Martin vs. The Boeing |
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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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.
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