Correlation Between Lockheed Martin and Illuvium
Can any of the company-specific risk be diversified away by investing in both Lockheed Martin and Illuvium 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 Illuvium into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lockheed Martin and Illuvium, you can compare the effects of market volatilities on Lockheed Martin and Illuvium 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 Illuvium. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lockheed Martin and Illuvium.
Diversification Opportunities for Lockheed Martin and Illuvium
-0.26 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Lockheed and Illuvium is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding Lockheed Martin and Illuvium in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Illuvium 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 Illuvium. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Illuvium has no effect on the direction of Lockheed Martin i.e., Lockheed Martin and Illuvium go up and down completely randomly.
Pair Corralation between Lockheed Martin and Illuvium
Considering the 90-day investment horizon Lockheed Martin is expected to generate 5.6 times less return on investment than Illuvium. But when comparing it to its historical volatility, Lockheed Martin is 9.28 times less risky than Illuvium. It trades about 0.06 of its potential returns per unit of risk. Illuvium is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 4,905 in Illuvium on August 27, 2024 and sell it today you would lose (63.00) from holding Illuvium or give up 1.28% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 48.6% |
| Values | Daily Returns |
Lockheed Martin vs. Illuvium
Performance |
| Timeline |
| Lockheed Martin |
| Illuvium |
Lockheed Martin and Illuvium Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lockheed Martin and Illuvium
The main advantage of trading using opposite Lockheed Martin and Illuvium positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lockheed Martin position performs unexpectedly, Illuvium 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 Illuvium will offset losses from the drop in Illuvium'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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
Other Complementary Tools
| Price Exposure Probability Analyze equity upside and downside potential for a given time horizon across multiple markets | |
| Global Correlations Find global opportunities by holding instruments from different markets | |
| Balance Of Power Check stock momentum by analyzing Balance Of Power indicator and other technical ratios | |
| Equity Analysis Research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities | |
| USA ETFs Find actively traded Exchange Traded Funds (ETF) in USA |