Correlation Between Lockheed Martin and Natura Co
Can any of the company-specific risk be diversified away by investing in both Lockheed Martin and Natura Co 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 Natura Co into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lockheed Martin and Natura Co Holding, you can compare the effects of market volatilities on Lockheed Martin and Natura Co 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 Natura Co. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lockheed Martin and Natura Co.
Diversification Opportunities for Lockheed Martin and Natura Co
0.48 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Lockheed and Natura is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Lockheed Martin and Natura Co Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Natura Co Holding 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 Natura Co. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Natura Co Holding has no effect on the direction of Lockheed Martin i.e., Lockheed Martin and Natura Co go up and down completely randomly.
Pair Corralation between Lockheed Martin and Natura Co
Considering the 90-day investment horizon Lockheed Martin is expected to under-perform the Natura Co. But the stock apears to be less risky and, when comparing its historical volatility, Lockheed Martin is 2.09 times less risky than Natura Co. The stock trades about -0.19 of its potential returns per unit of risk. The Natura Co Holding is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest 1,406 in Natura Co Holding on August 24, 2024 and sell it today you would lose (23.00) from holding Natura Co Holding or give up 1.64% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 91.3% |
| Values | Daily Returns |
Lockheed Martin vs. Natura Co Holding
Performance |
| Timeline |
| Lockheed Martin |
| Natura Co Holding |
Lockheed Martin and Natura Co Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lockheed Martin and Natura Co
The main advantage of trading using opposite Lockheed Martin and Natura Co positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lockheed Martin position performs unexpectedly, Natura Co 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 Natura Co will offset losses from the drop in Natura Co's long position.| Lockheed Martin vs. Northrop Grumman | Lockheed Martin vs. General Dynamics | Lockheed Martin vs. L3Harris Technologies | Lockheed Martin vs. The Boeing |
| Natura Co vs. Brpr Corporate Offices | Natura Co vs. Beyond Meat | Natura Co vs. Autohome | Natura Co vs. Delta Air Lines |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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