Correlation Between Lockheed Martin and Bank of NT
Can any of the company-specific risk be diversified away by investing in both Lockheed Martin and Bank of NT 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 Bank of NT into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lockheed Martin and Bank of NT, you can compare the effects of market volatilities on Lockheed Martin and Bank of NT 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 Bank of NT. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lockheed Martin and Bank of NT.
Diversification Opportunities for Lockheed Martin and Bank of NT
-0.27 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Lockheed and Bank is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding Lockheed Martin and Bank of NT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bank of NT 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 Bank of NT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bank of NT has no effect on the direction of Lockheed Martin i.e., Lockheed Martin and Bank of NT go up and down completely randomly.
Pair Corralation between Lockheed Martin and Bank of NT
Considering the 90-day investment horizon Lockheed Martin is expected to generate 1.84 times less return on investment than Bank of NT. But when comparing it to its historical volatility, Lockheed Martin is 1.88 times less risky than Bank of NT. It trades about 0.03 of its potential returns per unit of risk. Bank of NT is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 3,008 in Bank of NT on August 27, 2024 and sell it today you would earn a total of 837.00 from holding Bank of NT or generate 27.83% 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. Bank of NT
Performance |
| Timeline |
| Lockheed Martin |
| Bank of NT |
Lockheed Martin and Bank of NT Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lockheed Martin and Bank of NT
The main advantage of trading using opposite Lockheed Martin and Bank of NT positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lockheed Martin position performs unexpectedly, Bank of NT 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 Bank of NT will offset losses from the drop in Bank of NT's long position.| Lockheed Martin vs. Northrop Grumman | Lockheed Martin vs. General Dynamics | Lockheed Martin vs. L3Harris Technologies | Lockheed Martin vs. The Boeing |
| Bank of NT vs. PJT Partners | Bank of NT vs. National Bank Holdings | Bank of NT vs. FB Financial Corp | Bank of NT vs. Northrim BanCorp |
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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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