Correlation Between Lockheed Martin and Law Debenture
Can any of the company-specific risk be diversified away by investing in both Lockheed Martin and Law Debenture 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 Law Debenture into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lockheed Martin and Law Debenture Corp, you can compare the effects of market volatilities on Lockheed Martin and Law Debenture 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 Law Debenture. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lockheed Martin and Law Debenture.
Diversification Opportunities for Lockheed Martin and Law Debenture
0.26 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Lockheed and Law is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Lockheed Martin and Law Debenture Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Law Debenture Corp 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 Law Debenture. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Law Debenture Corp has no effect on the direction of Lockheed Martin i.e., Lockheed Martin and Law Debenture go up and down completely randomly.
Pair Corralation between Lockheed Martin and Law Debenture
Considering the 90-day investment horizon Lockheed Martin is expected to under-perform the Law Debenture. In addition to that, Lockheed Martin is 1.67 times more volatile than Law Debenture Corp. It trades about -0.2 of its total potential returns per unit of risk. Law Debenture Corp is currently generating about 0.09 per unit of volatility. If you would invest 88,200 in Law Debenture Corp on August 28, 2024 and sell it today you would earn a total of 1,400 from holding Law Debenture Corp or generate 1.59% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lockheed Martin vs. Law Debenture Corp
Performance |
| Timeline |
| Lockheed Martin |
| Law Debenture Corp |
Lockheed Martin and Law Debenture Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lockheed Martin and Law Debenture
The main advantage of trading using opposite Lockheed Martin and Law Debenture positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lockheed Martin position performs unexpectedly, Law Debenture 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 Law Debenture will offset losses from the drop in Law Debenture's long position.| Lockheed Martin vs. Northrop Grumman | Lockheed Martin vs. General Dynamics | Lockheed Martin vs. L3Harris Technologies | Lockheed Martin vs. The Boeing |
| Law Debenture vs. Edita Food Industries | Law Debenture vs. Fair Oaks Income | Law Debenture vs. Air Products Chemicals | Law Debenture vs. Westlake Chemical Corp |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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