Correlation Between Lockheed Martin and Mercury Systems
Can any of the company-specific risk be diversified away by investing in both Lockheed Martin and Mercury Systems 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 Mercury Systems into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lockheed Martin and Mercury Systems, you can compare the effects of market volatilities on Lockheed Martin and Mercury Systems 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 Mercury Systems. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lockheed Martin and Mercury Systems.
Diversification Opportunities for Lockheed Martin and Mercury Systems
-0.21 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Lockheed and Mercury is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding Lockheed Martin and Mercury Systems in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mercury Systems 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 Mercury Systems. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mercury Systems has no effect on the direction of Lockheed Martin i.e., Lockheed Martin and Mercury Systems go up and down completely randomly.
Pair Corralation between Lockheed Martin and Mercury Systems
Considering the 90-day investment horizon Lockheed Martin is expected to generate 0.39 times more return on investment than Mercury Systems. However, Lockheed Martin is 2.6 times less risky than Mercury Systems. It trades about 0.04 of its potential returns per unit of risk. Mercury Systems is currently generating about -0.01 per unit of risk. If you would invest 44,785 in Lockheed Martin on August 27, 2024 and sell it today you would earn a total of 9,437 from holding Lockheed Martin or generate 21.07% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lockheed Martin vs. Mercury Systems
Performance |
| Timeline |
| Lockheed Martin |
| Mercury Systems |
Lockheed Martin and Mercury Systems Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lockheed Martin and Mercury Systems
The main advantage of trading using opposite Lockheed Martin and Mercury Systems positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lockheed Martin position performs unexpectedly, Mercury Systems 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 Mercury Systems will offset losses from the drop in Mercury Systems' long position.| Lockheed Martin vs. Northrop Grumman | Lockheed Martin vs. General Dynamics | Lockheed Martin vs. L3Harris Technologies | Lockheed Martin vs. The Boeing |
| Mercury Systems vs. Curtiss Wright | Mercury Systems vs. Hexcel | Mercury Systems vs. Ducommun Incorporated | Mercury Systems vs. Woodward |
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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
Other Complementary Tools
| Portfolio File Import Quickly import all of your third-party portfolios from your local drive in csv format | |
| Analyst Advice Analyst recommendations and target price estimates broken down by several categories | |
| Sync Your Broker Sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors. | |
| Global Markets Map Get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes | |
| Portfolio Suggestion Get suggestions outside of your existing asset allocation including your own model portfolios |