Correlation Between Lockheed Martin and LKQ
Can any of the company-specific risk be diversified away by investing in both Lockheed Martin and LKQ 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 LKQ into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lockheed Martin and LKQ Corporation, you can compare the effects of market volatilities on Lockheed Martin and LKQ 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 LKQ. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lockheed Martin and LKQ.
Diversification Opportunities for Lockheed Martin and LKQ
0.09 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Lockheed and LKQ is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding Lockheed Martin and LKQ Corp. in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LKQ Corporation 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 LKQ. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LKQ Corporation has no effect on the direction of Lockheed Martin i.e., Lockheed Martin and LKQ go up and down completely randomly.
Pair Corralation between Lockheed Martin and LKQ
Considering the 90-day investment horizon Lockheed Martin is expected to under-perform the LKQ. In addition to that, Lockheed Martin is 1.01 times more volatile than LKQ Corporation. It trades about -0.19 of its total potential returns per unit of risk. LKQ Corporation is currently generating about 0.04 per unit of volatility. If you would invest 3,749 in LKQ Corporation on August 24, 2024 and sell it today you would earn a total of 39.00 from holding LKQ Corporation or generate 1.04% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lockheed Martin vs. LKQ Corp.
Performance |
| Timeline |
| Lockheed Martin |
| LKQ Corporation |
Lockheed Martin and LKQ Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lockheed Martin and LKQ
The main advantage of trading using opposite Lockheed Martin and LKQ positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lockheed Martin position performs unexpectedly, LKQ 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 LKQ will offset losses from the drop in LKQ'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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
Other Complementary Tools
| Sync Your Broker Sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors. | |
| Portfolio Volatility Check portfolio volatility and analyze historical return density to properly model market risk | |
| Equity Forecasting Use basic forecasting models to generate price predictions and determine price momentum | |
| Idea Analyzer Analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas | |
| Sign In To Macroaxis Sign in to explore Macroaxis' wealth optimization platform and fintech modules |