Correlation Between Lockheed Martin and CytomX Therapeutics
Can any of the company-specific risk be diversified away by investing in both Lockheed Martin and CytomX Therapeutics 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 CytomX Therapeutics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lockheed Martin and CytomX Therapeutics, you can compare the effects of market volatilities on Lockheed Martin and CytomX Therapeutics 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 CytomX Therapeutics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lockheed Martin and CytomX Therapeutics.
Diversification Opportunities for Lockheed Martin and CytomX Therapeutics
0.47 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Lockheed and CytomX is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Lockheed Martin and CytomX Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CytomX Therapeutics 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 CytomX Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CytomX Therapeutics has no effect on the direction of Lockheed Martin i.e., Lockheed Martin and CytomX Therapeutics go up and down completely randomly.
Pair Corralation between Lockheed Martin and CytomX Therapeutics
Considering the 90-day investment horizon Lockheed Martin is expected to generate 0.34 times more return on investment than CytomX Therapeutics. However, Lockheed Martin is 2.98 times less risky than CytomX Therapeutics. It trades about 0.13 of its potential returns per unit of risk. CytomX Therapeutics is currently generating about -0.14 per unit of risk. If you would invest 45,288 in Lockheed Martin on August 24, 2024 and sell it today you would earn a total of 8,913 from holding Lockheed Martin or generate 19.68% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 99.21% |
| Values | Daily Returns |
Lockheed Martin vs. CytomX Therapeutics
Performance |
| Timeline |
| Lockheed Martin |
| CytomX Therapeutics |
Lockheed Martin and CytomX Therapeutics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lockheed Martin and CytomX Therapeutics
The main advantage of trading using opposite Lockheed Martin and CytomX Therapeutics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lockheed Martin position performs unexpectedly, CytomX Therapeutics 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 CytomX Therapeutics will offset losses from the drop in CytomX Therapeutics' long position.| Lockheed Martin vs. Northrop Grumman | Lockheed Martin vs. General Dynamics | Lockheed Martin vs. L3Harris Technologies | Lockheed Martin vs. The Boeing |
| CytomX Therapeutics vs. ZyVersa Therapeutics | CytomX Therapeutics vs. Sonnet Biotherapeutics Holdings | CytomX Therapeutics vs. Zura Bio Limited | CytomX Therapeutics vs. Phio Pharmaceuticals Corp |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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