Correlation Between Lockheed Martin and Elastic NV
Can any of the company-specific risk be diversified away by investing in both Lockheed Martin and Elastic NV 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 Elastic NV into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lockheed Martin and Elastic NV, you can compare the effects of market volatilities on Lockheed Martin and Elastic NV 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 Elastic NV. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lockheed Martin and Elastic NV.
Diversification Opportunities for Lockheed Martin and Elastic NV
-0.36 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Lockheed and Elastic is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Lockheed Martin and Elastic NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Elastic NV 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 Elastic NV. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Elastic NV has no effect on the direction of Lockheed Martin i.e., Lockheed Martin and Elastic NV go up and down completely randomly.
Pair Corralation between Lockheed Martin and Elastic NV
Considering the 90-day investment horizon Lockheed Martin is expected to under-perform the Elastic NV. But the stock apears to be less risky and, when comparing its historical volatility, Lockheed Martin is 1.73 times less risky than Elastic NV. The stock trades about -0.19 of its potential returns per unit of risk. The Elastic NV is currently generating about 0.43 of returns per unit of risk over similar time horizon. If you would invest 7,761 in Elastic NV on August 24, 2024 and sell it today you would earn a total of 1,652 from holding Elastic NV or generate 21.29% 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. Elastic NV
Performance |
| Timeline |
| Lockheed Martin |
| Elastic NV |
Lockheed Martin and Elastic NV Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lockheed Martin and Elastic NV
The main advantage of trading using opposite Lockheed Martin and Elastic NV positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lockheed Martin position performs unexpectedly, Elastic NV 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 Elastic NV will offset losses from the drop in Elastic NV'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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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