Correlation Between Lockheed Martin and AB Disruptors
Can any of the company-specific risk be diversified away by investing in both Lockheed Martin and AB Disruptors 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 AB Disruptors into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lockheed Martin and AB Disruptors ETF, you can compare the effects of market volatilities on Lockheed Martin and AB Disruptors 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 AB Disruptors. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lockheed Martin and AB Disruptors.
Diversification Opportunities for Lockheed Martin and AB Disruptors
-0.09 | Correlation Coefficient |
Good diversification
The 3 months correlation between Lockheed and FWD is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding Lockheed Martin and AB Disruptors ETF in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AB Disruptors ETF 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 AB Disruptors. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AB Disruptors ETF has no effect on the direction of Lockheed Martin i.e., Lockheed Martin and AB Disruptors go up and down completely randomly.
Pair Corralation between Lockheed Martin and AB Disruptors
Considering the 90-day investment horizon Lockheed Martin is expected to under-perform the AB Disruptors. But the stock apears to be less risky and, when comparing its historical volatility, Lockheed Martin is 1.16 times less risky than AB Disruptors. The stock trades about -0.09 of its potential returns per unit of risk. The AB Disruptors ETF is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest 7,936 in AB Disruptors ETF on August 27, 2024 and sell it today you would earn a total of 459.00 from holding AB Disruptors ETF or generate 5.78% 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. AB Disruptors ETF
Performance |
| Timeline |
| Lockheed Martin |
| AB Disruptors ETF |
Lockheed Martin and AB Disruptors Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lockheed Martin and AB Disruptors
The main advantage of trading using opposite Lockheed Martin and AB Disruptors positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lockheed Martin position performs unexpectedly, AB Disruptors 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 AB Disruptors will offset losses from the drop in AB Disruptors' long position.| Lockheed Martin vs. Northrop Grumman | Lockheed Martin vs. General Dynamics | Lockheed Martin vs. L3Harris Technologies | Lockheed Martin vs. The Boeing |
| AB Disruptors vs. The RBB Fund | AB Disruptors vs. The RBB Fund | AB Disruptors vs. Motley Fool Next | AB Disruptors vs. Motley Fool Capital |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
Other Complementary Tools
| Fundamentals Comparison Compare fundamentals across multiple equities to find investing opportunities | |
| Idea Analyzer Analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas | |
| Crypto Correlations Use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins | |
| Performance Analysis Check effects of mean-variance optimization against your current asset allocation | |
| Portfolio Analyzer Portfolio analysis module that provides access to portfolio diagnostics and optimization engine |