Correlation Between Lockheed Martin and Pernod Ricard
Can any of the company-specific risk be diversified away by investing in both Lockheed Martin and Pernod Ricard 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 Pernod Ricard into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lockheed Martin and Pernod Ricard SA, you can compare the effects of market volatilities on Lockheed Martin and Pernod Ricard 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 Pernod Ricard. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lockheed Martin and Pernod Ricard.
Diversification Opportunities for Lockheed Martin and Pernod Ricard
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Lockheed and Pernod is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Lockheed Martin and Pernod Ricard SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pernod Ricard SA 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 Pernod Ricard. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pernod Ricard SA has no effect on the direction of Lockheed Martin i.e., Lockheed Martin and Pernod Ricard go up and down completely randomly.
Pair Corralation between Lockheed Martin and Pernod Ricard
Considering the 90-day investment horizon Lockheed Martin is expected to generate 0.81 times more return on investment than Pernod Ricard. However, Lockheed Martin is 1.24 times less risky than Pernod Ricard. It trades about -0.2 of its potential returns per unit of risk. Pernod Ricard SA is currently generating about -0.33 per unit of risk. If you would invest 55,517 in Lockheed Martin on August 28, 2024 and sell it today you would lose (3,328) from holding Lockheed Martin or give up 5.99% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lockheed Martin vs. Pernod Ricard SA
Performance |
| Timeline |
| Lockheed Martin |
| Pernod Ricard SA |
Lockheed Martin and Pernod Ricard Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lockheed Martin and Pernod Ricard
The main advantage of trading using opposite Lockheed Martin and Pernod Ricard positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lockheed Martin position performs unexpectedly, Pernod Ricard 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 Pernod Ricard will offset losses from the drop in Pernod Ricard's long position.| Lockheed Martin vs. Northrop Grumman | Lockheed Martin vs. General Dynamics | Lockheed Martin vs. L3Harris Technologies | Lockheed Martin vs. The Boeing |
| Pernod Ricard vs. LOreal SA | Pernod Ricard vs. Danone SA | Pernod Ricard vs. Compagnie Generale des | Pernod Ricard vs. Air Liquide SA |
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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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