Correlation Between Lockheed Martin and Jhancock Short
Can any of the company-specific risk be diversified away by investing in both Lockheed Martin and Jhancock Short 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 Jhancock Short into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lockheed Martin and Jhancock Short Duration, you can compare the effects of market volatilities on Lockheed Martin and Jhancock Short 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 Jhancock Short. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lockheed Martin and Jhancock Short.
Diversification Opportunities for Lockheed Martin and Jhancock Short
0.49 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Lockheed and Jhancock is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Lockheed Martin and Jhancock Short Duration in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jhancock Short Duration 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 Jhancock Short. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jhancock Short Duration has no effect on the direction of Lockheed Martin i.e., Lockheed Martin and Jhancock Short go up and down completely randomly.
Pair Corralation between Lockheed Martin and Jhancock Short
Considering the 90-day investment horizon Lockheed Martin is expected to under-perform the Jhancock Short. In addition to that, Lockheed Martin is 9.51 times more volatile than Jhancock Short Duration. It trades about -0.23 of its total potential returns per unit of risk. Jhancock Short Duration is currently generating about 0.04 per unit of volatility. If you would invest 933.00 in Jhancock Short Duration on August 23, 2024 and sell it today you would earn a total of 1.00 from holding Jhancock Short Duration or generate 0.11% 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. Jhancock Short Duration
Performance |
| Timeline |
| Lockheed Martin |
| Jhancock Short Duration |
Lockheed Martin and Jhancock Short Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lockheed Martin and Jhancock Short
The main advantage of trading using opposite Lockheed Martin and Jhancock Short positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lockheed Martin position performs unexpectedly, Jhancock Short 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 Jhancock Short will offset losses from the drop in Jhancock Short'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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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