Correlation Between Lockheed Martin and Spectris Plc
Can any of the company-specific risk be diversified away by investing in both Lockheed Martin and Spectris Plc 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 Spectris Plc into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lockheed Martin and Spectris plc, you can compare the effects of market volatilities on Lockheed Martin and Spectris Plc 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 Spectris Plc. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lockheed Martin and Spectris Plc.
Diversification Opportunities for Lockheed Martin and Spectris Plc
-0.05 | Correlation Coefficient |
Good diversification
The 3 months correlation between Lockheed and Spectris is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding Lockheed Martin and Spectris plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Spectris plc 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 Spectris Plc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Spectris plc has no effect on the direction of Lockheed Martin i.e., Lockheed Martin and Spectris Plc go up and down completely randomly.
Pair Corralation between Lockheed Martin and Spectris Plc
Considering the 90-day investment horizon Lockheed Martin is expected to under-perform the Spectris Plc. But the stock apears to be less risky and, when comparing its historical volatility, Lockheed Martin is 2.4 times less risky than Spectris Plc. The stock trades about -0.2 of its potential returns per unit of risk. The Spectris plc is currently generating about -0.08 of returns per unit of risk over similar time horizon. If you would invest 3,513 in Spectris plc on August 28, 2024 and sell it today you would lose (233.00) from holding Spectris plc or give up 6.63% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lockheed Martin vs. Spectris plc
Performance |
| Timeline |
| Lockheed Martin |
| Spectris plc |
Lockheed Martin and Spectris Plc Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lockheed Martin and Spectris Plc
The main advantage of trading using opposite Lockheed Martin and Spectris Plc positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lockheed Martin position performs unexpectedly, Spectris Plc 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 Spectris Plc will offset losses from the drop in Spectris Plc's long position.| Lockheed Martin vs. Northrop Grumman | Lockheed Martin vs. General Dynamics | Lockheed Martin vs. L3Harris Technologies | Lockheed Martin vs. The Boeing |
| Spectris Plc vs. Garmin | Spectris Plc vs. Keysight Technologies | Spectris Plc vs. Fortive Corp | Spectris Plc vs. Teledyne Technologies Incorporated |
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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