Correlation Between Lockheed Martin and International Media
Can any of the company-specific risk be diversified away by investing in both Lockheed Martin and International Media 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 International Media into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lockheed Martin and International Media Acquisition, you can compare the effects of market volatilities on Lockheed Martin and International Media 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 International Media. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lockheed Martin and International Media.
Diversification Opportunities for Lockheed Martin and International Media
0.13 | Correlation Coefficient |
Average diversification
The 3 months correlation between Lockheed and International is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding Lockheed Martin and International Media Acquisitio in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on International Media 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 International Media. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of International Media has no effect on the direction of Lockheed Martin i.e., Lockheed Martin and International Media go up and down completely randomly.
Pair Corralation between Lockheed Martin and International Media
Considering the 90-day investment horizon Lockheed Martin is expected to generate 121.25 times less return on investment than International Media. But when comparing it to its historical volatility, Lockheed Martin is 66.24 times less risky than International Media. It trades about 0.04 of its potential returns per unit of risk. International Media Acquisition is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 10.00 in International Media Acquisition on August 27, 2024 and sell it today you would lose (4.00) from holding International Media Acquisition or give up 40.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 45.49% |
| Values | Daily Returns |
Lockheed Martin vs. International Media Acquisitio
Performance |
| Timeline |
| Lockheed Martin |
| International Media |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Lockheed Martin and International Media Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lockheed Martin and International Media
The main advantage of trading using opposite Lockheed Martin and International Media positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lockheed Martin position performs unexpectedly, International Media 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 International Media will offset losses from the drop in International Media's long position.| Lockheed Martin vs. Northrop Grumman | Lockheed Martin vs. General Dynamics | Lockheed Martin vs. L3Harris Technologies | Lockheed Martin vs. The Boeing |
| International Media vs. Old Dominion Freight | International Media vs. CDW Corp | International Media vs. Verra Mobility Corp | International Media vs. Hooker Furniture |
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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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