Correlation Between Lockheed Martin and Halozyme Therapeutics
Can any of the company-specific risk be diversified away by investing in both Lockheed Martin and Halozyme 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 Halozyme 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 Halozyme Therapeutics, you can compare the effects of market volatilities on Lockheed Martin and Halozyme 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 Halozyme Therapeutics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lockheed Martin and Halozyme Therapeutics.
Diversification Opportunities for Lockheed Martin and Halozyme Therapeutics
0.11 | Correlation Coefficient |
Average diversification
The 3 months correlation between Lockheed and Halozyme is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding Lockheed Martin and Halozyme Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Halozyme 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 Halozyme Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Halozyme Therapeutics has no effect on the direction of Lockheed Martin i.e., Lockheed Martin and Halozyme Therapeutics go up and down completely randomly.
Pair Corralation between Lockheed Martin and Halozyme Therapeutics
Considering the 90-day investment horizon Lockheed Martin is expected to under-perform the Halozyme Therapeutics. But the stock apears to be less risky and, when comparing its historical volatility, Lockheed Martin is 4.81 times less risky than Halozyme Therapeutics. The stock trades about -0.09 of its potential returns per unit of risk. The Halozyme Therapeutics is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest 5,046 in Halozyme Therapeutics on August 27, 2024 and sell it today you would lose (146.00) from holding Halozyme Therapeutics or give up 2.89% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lockheed Martin vs. Halozyme Therapeutics
Performance |
| Timeline |
| Lockheed Martin |
| Halozyme Therapeutics |
Lockheed Martin and Halozyme Therapeutics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lockheed Martin and Halozyme Therapeutics
The main advantage of trading using opposite Lockheed Martin and Halozyme Therapeutics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lockheed Martin position performs unexpectedly, Halozyme 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 Halozyme Therapeutics will offset losses from the drop in Halozyme Therapeutics' long position.| Lockheed Martin vs. Northrop Grumman | Lockheed Martin vs. General Dynamics | Lockheed Martin vs. L3Harris Technologies | Lockheed Martin vs. The Boeing |
| Halozyme Therapeutics vs. Agios Pharm | Halozyme Therapeutics vs. Insmed Inc | Halozyme Therapeutics vs. Ultragenyx | Halozyme Therapeutics vs. Biomarin Pharmaceutical |
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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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