Correlation Between Lockheed Martin and HEICO
Can any of the company-specific risk be diversified away by investing in both Lockheed Martin and HEICO 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 HEICO into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lockheed Martin and HEICO, you can compare the effects of market volatilities on Lockheed Martin and HEICO 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 HEICO. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lockheed Martin and HEICO.
Diversification Opportunities for Lockheed Martin and HEICO
0.59 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Lockheed and HEICO is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Lockheed Martin and HEICO in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HEICO 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 HEICO. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HEICO has no effect on the direction of Lockheed Martin i.e., Lockheed Martin and HEICO go up and down completely randomly.
Pair Corralation between Lockheed Martin and HEICO
Considering the 90-day investment horizon Lockheed Martin is expected to generate 1.09 times less return on investment than HEICO. But when comparing it to its historical volatility, Lockheed Martin is 1.09 times less risky than HEICO. It trades about 0.04 of its potential returns per unit of risk. HEICO is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 18,646 in HEICO on October 23, 2024 and sell it today you would earn a total of 157.00 from holding HEICO or generate 0.84% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lockheed Martin vs. HEICO
Performance |
| Timeline |
| Lockheed Martin |
| HEICO |
Lockheed Martin and HEICO Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lockheed Martin and HEICO
The main advantage of trading using opposite Lockheed Martin and HEICO positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lockheed Martin position performs unexpectedly, HEICO 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 HEICO will offset losses from the drop in HEICO's long position.| Lockheed Martin vs. Northrop Grumman | Lockheed Martin vs. General Dynamics | Lockheed Martin vs. L3Harris Technologies | Lockheed Martin vs. The Boeing |
| HEICO vs. Vertical Aerospace | HEICO vs. Rolls Royce Holdings plc | HEICO vs. Embraer SA ADR | HEICO vs. Rocket Lab USA |
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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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