Correlation Between Lockheed Martin and Paramount Global
Can any of the company-specific risk be diversified away by investing in both Lockheed Martin and Paramount Global 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 Paramount Global into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lockheed Martin and Paramount Global Class, you can compare the effects of market volatilities on Lockheed Martin and Paramount Global 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 Paramount Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lockheed Martin and Paramount Global.
Diversification Opportunities for Lockheed Martin and Paramount Global
-0.3 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Lockheed and Paramount is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding Lockheed Martin and Paramount Global Class in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Paramount Global Class 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 Paramount Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Paramount Global Class has no effect on the direction of Lockheed Martin i.e., Lockheed Martin and Paramount Global go up and down completely randomly.
Pair Corralation between Lockheed Martin and Paramount Global
Considering the 90-day investment horizon Lockheed Martin is expected to generate 0.33 times more return on investment than Paramount Global. However, Lockheed Martin is 3.04 times less risky than Paramount Global. It trades about 0.13 of its potential returns per unit of risk. Paramount Global Class is currently generating about 0.03 per unit of risk. If you would invest 42,301 in Lockheed Martin on August 27, 2024 and sell it today you would earn a total of 11,921 from holding Lockheed Martin or generate 28.18% 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. Paramount Global Class
Performance |
| Timeline |
| Lockheed Martin |
| Paramount Global Class |
Lockheed Martin and Paramount Global Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lockheed Martin and Paramount Global
The main advantage of trading using opposite Lockheed Martin and Paramount Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lockheed Martin position performs unexpectedly, Paramount Global 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 Paramount Global will offset losses from the drop in Paramount Global's long position.| Lockheed Martin vs. Northrop Grumman | Lockheed Martin vs. General Dynamics | Lockheed Martin vs. L3Harris Technologies | Lockheed Martin vs. The Boeing |
| Paramount Global vs. Fox Corp Class | Paramount Global vs. News Corp A | Paramount Global vs. News Corp B | Paramount Global vs. Liberty Media |
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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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