Correlation Between Lockheed Martin and MasterBrand
Can any of the company-specific risk be diversified away by investing in both Lockheed Martin and MasterBrand 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 MasterBrand into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lockheed Martin and MasterBrand, you can compare the effects of market volatilities on Lockheed Martin and MasterBrand 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 MasterBrand. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lockheed Martin and MasterBrand.
Diversification Opportunities for Lockheed Martin and MasterBrand
0.41 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Lockheed and MasterBrand is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Lockheed Martin and MasterBrand in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MasterBrand 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 MasterBrand. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MasterBrand has no effect on the direction of Lockheed Martin i.e., Lockheed Martin and MasterBrand go up and down completely randomly.
Pair Corralation between Lockheed Martin and MasterBrand
Considering the 90-day investment horizon Lockheed Martin is expected to generate 3.22 times less return on investment than MasterBrand. But when comparing it to its historical volatility, Lockheed Martin is 2.18 times less risky than MasterBrand. It trades about 0.04 of its potential returns per unit of risk. MasterBrand is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 966.00 in MasterBrand on August 27, 2024 and sell it today you would earn a total of 753.00 from holding MasterBrand or generate 77.95% 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. MasterBrand
Performance |
| Timeline |
| Lockheed Martin |
| MasterBrand |
Lockheed Martin and MasterBrand Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lockheed Martin and MasterBrand
The main advantage of trading using opposite Lockheed Martin and MasterBrand positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lockheed Martin position performs unexpectedly, MasterBrand 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 MasterBrand will offset losses from the drop in MasterBrand's long position.| Lockheed Martin vs. Northrop Grumman | Lockheed Martin vs. General Dynamics | Lockheed Martin vs. L3Harris Technologies | Lockheed Martin vs. The Boeing |
| MasterBrand vs. Bassett Furniture Industries | MasterBrand vs. Ethan Allen Interiors | MasterBrand vs. Natuzzi SpA | MasterBrand vs. Flexsteel Industries |
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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