Correlation Between Lockheed Martin and Chegg
Can any of the company-specific risk be diversified away by investing in both Lockheed Martin and Chegg 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 Chegg into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lockheed Martin and Chegg Inc, you can compare the effects of market volatilities on Lockheed Martin and Chegg 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 Chegg. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lockheed Martin and Chegg.
Diversification Opportunities for Lockheed Martin and Chegg
-0.38 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Lockheed and Chegg is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding Lockheed Martin and Chegg Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chegg Inc 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 Chegg. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chegg Inc has no effect on the direction of Lockheed Martin i.e., Lockheed Martin and Chegg go up and down completely randomly.
Pair Corralation between Lockheed Martin and Chegg
Considering the 90-day investment horizon Lockheed Martin is expected to under-perform the Chegg. But the stock apears to be less risky and, when comparing its historical volatility, Lockheed Martin is 4.25 times less risky than Chegg. The stock trades about -0.2 of its potential returns per unit of risk. The Chegg Inc is currently generating about 0.25 of returns per unit of risk over similar time horizon. If you would invest 171.00 in Chegg Inc on August 27, 2024 and sell it today you would earn a total of 55.00 from holding Chegg Inc or generate 32.16% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lockheed Martin vs. Chegg Inc
Performance |
| Timeline |
| Lockheed Martin |
| Chegg Inc |
Lockheed Martin and Chegg Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lockheed Martin and Chegg
The main advantage of trading using opposite Lockheed Martin and Chegg positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lockheed Martin position performs unexpectedly, Chegg 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 Chegg will offset losses from the drop in Chegg'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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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