Correlation Between Lockheed Martin and Enerpac Tool
Can any of the company-specific risk be diversified away by investing in both Lockheed Martin and Enerpac Tool 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 Enerpac Tool into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lockheed Martin and Enerpac Tool Group, you can compare the effects of market volatilities on Lockheed Martin and Enerpac Tool 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 Enerpac Tool. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lockheed Martin and Enerpac Tool.
Diversification Opportunities for Lockheed Martin and Enerpac Tool
-0.27 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Lockheed and Enerpac is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding Lockheed Martin and Enerpac Tool Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Enerpac Tool Group 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 Enerpac Tool. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Enerpac Tool Group has no effect on the direction of Lockheed Martin i.e., Lockheed Martin and Enerpac Tool go up and down completely randomly.
Pair Corralation between Lockheed Martin and Enerpac Tool
Considering the 90-day investment horizon Lockheed Martin is expected to under-perform the Enerpac Tool. But the stock apears to be less risky and, when comparing its historical volatility, Lockheed Martin is 1.37 times less risky than Enerpac Tool. The stock trades about -0.02 of its potential returns per unit of risk. The Enerpac Tool Group is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest 4,067 in Enerpac Tool Group on August 23, 2024 and sell it today you would earn a total of 722.00 from holding Enerpac Tool Group or generate 17.75% 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. Enerpac Tool Group
Performance |
| Timeline |
| Lockheed Martin |
| Enerpac Tool Group |
Lockheed Martin and Enerpac Tool Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lockheed Martin and Enerpac Tool
The main advantage of trading using opposite Lockheed Martin and Enerpac Tool positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lockheed Martin position performs unexpectedly, Enerpac Tool 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 Enerpac Tool will offset losses from the drop in Enerpac Tool's long position.| Lockheed Martin vs. Northrop Grumman | Lockheed Martin vs. General Dynamics | Lockheed Martin vs. L3Harris Technologies | Lockheed Martin vs. The Boeing |
| Enerpac Tool vs. Omega Flex | Enerpac Tool vs. Luxfer Holdings PLC | Enerpac Tool vs. Gorman Rupp | Enerpac Tool vs. John Bean Technologies |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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