Correlation Between Lockheed Martin and Kongsberg Gruppen
Can any of the company-specific risk be diversified away by investing in both Lockheed Martin and Kongsberg Gruppen 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 Kongsberg Gruppen into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lockheed Martin and Kongsberg Gruppen ASA, you can compare the effects of market volatilities on Lockheed Martin and Kongsberg Gruppen 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 Kongsberg Gruppen. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lockheed Martin and Kongsberg Gruppen.
Diversification Opportunities for Lockheed Martin and Kongsberg Gruppen
-0.46 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Lockheed and Kongsberg is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding Lockheed Martin and Kongsberg Gruppen ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kongsberg Gruppen ASA 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 Kongsberg Gruppen. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kongsberg Gruppen ASA has no effect on the direction of Lockheed Martin i.e., Lockheed Martin and Kongsberg Gruppen go up and down completely randomly.
Pair Corralation between Lockheed Martin and Kongsberg Gruppen
Considering the 90-day investment horizon Lockheed Martin is expected to under-perform the Kongsberg Gruppen. But the stock apears to be less risky and, when comparing its historical volatility, Lockheed Martin is 1.97 times less risky than Kongsberg Gruppen. The stock trades about -0.15 of its potential returns per unit of risk. The Kongsberg Gruppen ASA is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 9,841 in Kongsberg Gruppen ASA on August 30, 2024 and sell it today you would earn a total of 759.00 from holding Kongsberg Gruppen ASA or generate 7.71% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 93.18% |
| Values | Daily Returns |
Lockheed Martin vs. Kongsberg Gruppen ASA
Performance |
| Timeline |
| Lockheed Martin |
| Kongsberg Gruppen ASA |
Lockheed Martin and Kongsberg Gruppen Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lockheed Martin and Kongsberg Gruppen
The main advantage of trading using opposite Lockheed Martin and Kongsberg Gruppen positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lockheed Martin position performs unexpectedly, Kongsberg Gruppen 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 Kongsberg Gruppen will offset losses from the drop in Kongsberg Gruppen's long position.| Lockheed Martin vs. Northrop Grumman | Lockheed Martin vs. General Dynamics | Lockheed Martin vs. L3Harris Technologies | Lockheed Martin vs. The Boeing |
| Kongsberg Gruppen vs. Sturm Ruger | Kongsberg Gruppen vs. Ammo Inc | Kongsberg Gruppen vs. Kratos Defense Security | Kongsberg Gruppen 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 CEOs Directory module to screen CEOs from public companies around the world.
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