Correlation Between Lockheed Martin and Columbia Mid
Can any of the company-specific risk be diversified away by investing in both Lockheed Martin and Columbia Mid 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 Columbia Mid into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lockheed Martin and Columbia Mid Cap, you can compare the effects of market volatilities on Lockheed Martin and Columbia Mid 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 Columbia Mid. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lockheed Martin and Columbia Mid.
Diversification Opportunities for Lockheed Martin and Columbia Mid
-0.23 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Lockheed and Columbia is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding Lockheed Martin and Columbia Mid Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Columbia Mid Cap 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 Columbia Mid. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Columbia Mid Cap has no effect on the direction of Lockheed Martin i.e., Lockheed Martin and Columbia Mid go up and down completely randomly.
Pair Corralation between Lockheed Martin and Columbia Mid
Considering the 90-day investment horizon Lockheed Martin is expected to under-perform the Columbia Mid. But the stock apears to be less risky and, when comparing its historical volatility, Lockheed Martin is 1.18 times less risky than Columbia Mid. The stock trades about -0.19 of its potential returns per unit of risk. The Columbia Mid Cap is currently generating about 0.38 of returns per unit of risk over similar time horizon. If you would invest 2,862 in Columbia Mid Cap on August 24, 2024 and sell it today you would earn a total of 339.00 from holding Columbia Mid Cap or generate 11.84% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Lockheed Martin vs. Columbia Mid Cap
Performance |
| Timeline |
| Lockheed Martin |
| Columbia Mid Cap |
Lockheed Martin and Columbia Mid Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lockheed Martin and Columbia Mid
The main advantage of trading using opposite Lockheed Martin and Columbia Mid positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lockheed Martin position performs unexpectedly, Columbia Mid 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 Columbia Mid will offset losses from the drop in Columbia Mid's long position.| Lockheed Martin vs. Northrop Grumman | Lockheed Martin vs. General Dynamics | Lockheed Martin vs. L3Harris Technologies | Lockheed Martin vs. The Boeing |
| Columbia Mid vs. T Rowe Price | Columbia Mid vs. T Rowe Price | Columbia Mid vs. T Rowe Price | Columbia Mid vs. T Rowe Price |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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