Correlation Between Lockheed Martin and Dynex Capital
Can any of the company-specific risk be diversified away by investing in both Lockheed Martin and Dynex Capital 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 Dynex Capital into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lockheed Martin and Dynex Capital, you can compare the effects of market volatilities on Lockheed Martin and Dynex Capital 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 Dynex Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lockheed Martin and Dynex Capital.
Diversification Opportunities for Lockheed Martin and Dynex Capital
-0.21 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Lockheed and Dynex is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding Lockheed Martin and Dynex Capital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dynex Capital 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 Dynex Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dynex Capital has no effect on the direction of Lockheed Martin i.e., Lockheed Martin and Dynex Capital go up and down completely randomly.
Pair Corralation between Lockheed Martin and Dynex Capital
Considering the 90-day investment horizon Lockheed Martin is expected to generate 1.56 times less return on investment than Dynex Capital. But when comparing it to its historical volatility, Lockheed Martin is 1.39 times less risky than Dynex Capital. It trades about 0.03 of its potential returns per unit of risk. Dynex Capital is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 998.00 in Dynex Capital on August 26, 2024 and sell it today you would earn a total of 241.00 from holding Dynex Capital or generate 24.15% 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. Dynex Capital
Performance |
| Timeline |
| Lockheed Martin |
| Dynex Capital |
Lockheed Martin and Dynex Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lockheed Martin and Dynex Capital
The main advantage of trading using opposite Lockheed Martin and Dynex Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lockheed Martin position performs unexpectedly, Dynex Capital 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 Dynex Capital will offset losses from the drop in Dynex Capital'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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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