Correlation Between Lockheed Martin and National Presto
Can any of the company-specific risk be diversified away by investing in both Lockheed Martin and National Presto 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 National Presto into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lockheed Martin and National Presto Industries, you can compare the effects of market volatilities on Lockheed Martin and National Presto 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 National Presto. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lockheed Martin and National Presto.
Diversification Opportunities for Lockheed Martin and National Presto
-0.43 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Lockheed and National is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding Lockheed Martin and National Presto Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on National Presto Indu 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 National Presto. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of National Presto Indu has no effect on the direction of Lockheed Martin i.e., Lockheed Martin and National Presto go up and down completely randomly.
Pair Corralation between Lockheed Martin and National Presto
Considering the 90-day investment horizon Lockheed Martin is expected to under-perform the National Presto. But the stock apears to be less risky and, when comparing its historical volatility, Lockheed Martin is 1.56 times less risky than National Presto. The stock trades about -0.19 of its potential returns per unit of risk. The National Presto Industries is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 7,418 in National Presto Industries on August 24, 2024 and sell it today you would earn a total of 234.00 from holding National Presto Industries or generate 3.15% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lockheed Martin vs. National Presto Industries
Performance |
| Timeline |
| Lockheed Martin |
| National Presto Indu |
Lockheed Martin and National Presto Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lockheed Martin and National Presto
The main advantage of trading using opposite Lockheed Martin and National Presto positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lockheed Martin position performs unexpectedly, National Presto 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 National Presto will offset losses from the drop in National Presto's long position.| Lockheed Martin vs. Northrop Grumman | Lockheed Martin vs. General Dynamics | Lockheed Martin vs. L3Harris Technologies | Lockheed Martin vs. The Boeing |
| National Presto vs. Park Electrochemical | National Presto vs. Ducommun Incorporated | National Presto vs. Innovative Solutions and | National Presto vs. VSE Corporation |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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