Correlation Between Lockheed Martin and BCB Bancorp
Can any of the company-specific risk be diversified away by investing in both Lockheed Martin and BCB Bancorp 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 BCB Bancorp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lockheed Martin and BCB Bancorp, you can compare the effects of market volatilities on Lockheed Martin and BCB Bancorp 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 BCB Bancorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lockheed Martin and BCB Bancorp.
Diversification Opportunities for Lockheed Martin and BCB Bancorp
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Lockheed and BCB is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Lockheed Martin and BCB Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BCB Bancorp 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 BCB Bancorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BCB Bancorp has no effect on the direction of Lockheed Martin i.e., Lockheed Martin and BCB Bancorp go up and down completely randomly.
Pair Corralation between Lockheed Martin and BCB Bancorp
Considering the 90-day investment horizon Lockheed Martin is expected to generate 0.75 times more return on investment than BCB Bancorp. However, Lockheed Martin is 1.33 times less risky than BCB Bancorp. It trades about -0.21 of its potential returns per unit of risk. BCB Bancorp is currently generating about -0.16 per unit of risk. If you would invest 52,765 in Lockheed Martin on November 18, 2024 and sell it today you would lose (10,446) from holding Lockheed Martin or give up 19.8% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lockheed Martin vs. BCB Bancorp
Performance |
| Timeline |
| Lockheed Martin |
| BCB Bancorp |
Lockheed Martin and BCB Bancorp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lockheed Martin and BCB Bancorp
The main advantage of trading using opposite Lockheed Martin and BCB Bancorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lockheed Martin position performs unexpectedly, BCB Bancorp 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 BCB Bancorp will offset losses from the drop in BCB Bancorp's long position.| Lockheed Martin vs. Northrop Grumman | Lockheed Martin vs. General Dynamics | Lockheed Martin vs. L3Harris Technologies | Lockheed Martin vs. The Boeing |
| BCB Bancorp vs. Provident Financial Services | BCB Bancorp vs. First Mid Illinois | BCB Bancorp vs. ConnectOne Bancorp | BCB Bancorp vs. Finward Bancorp |
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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