Correlation Between Lockheed Martin and Sumitomo Mitsui
Can any of the company-specific risk be diversified away by investing in both Lockheed Martin and Sumitomo Mitsui 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 Sumitomo Mitsui into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lockheed Martin and Sumitomo Mitsui Financial, you can compare the effects of market volatilities on Lockheed Martin and Sumitomo Mitsui 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 Sumitomo Mitsui. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lockheed Martin and Sumitomo Mitsui.
Diversification Opportunities for Lockheed Martin and Sumitomo Mitsui
-0.46 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Lockheed and Sumitomo is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding Lockheed Martin and Sumitomo Mitsui Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sumitomo Mitsui Financial 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 Sumitomo Mitsui. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sumitomo Mitsui Financial has no effect on the direction of Lockheed Martin i.e., Lockheed Martin and Sumitomo Mitsui go up and down completely randomly.
Pair Corralation between Lockheed Martin and Sumitomo Mitsui
Considering the 90-day investment horizon Lockheed Martin is expected to under-perform the Sumitomo Mitsui. In addition to that, Lockheed Martin is 1.57 times more volatile than Sumitomo Mitsui Financial. It trades about -0.29 of its total potential returns per unit of risk. Sumitomo Mitsui Financial is currently generating about 0.1 per unit of volatility. If you would invest 1,469 in Sumitomo Mitsui Financial on November 18, 2024 and sell it today you would earn a total of 44.00 from holding Sumitomo Mitsui Financial or generate 3.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lockheed Martin vs. Sumitomo Mitsui Financial
Performance |
| Timeline |
| Lockheed Martin |
| Sumitomo Mitsui Financial |
Lockheed Martin and Sumitomo Mitsui Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lockheed Martin and Sumitomo Mitsui
The main advantage of trading using opposite Lockheed Martin and Sumitomo Mitsui positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lockheed Martin position performs unexpectedly, Sumitomo Mitsui 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 Sumitomo Mitsui will offset losses from the drop in Sumitomo Mitsui's long position.| Lockheed Martin vs. Northrop Grumman | Lockheed Martin vs. General Dynamics | Lockheed Martin vs. L3Harris Technologies | Lockheed Martin vs. The Boeing |
| Sumitomo Mitsui vs. Barclays PLC ADR | Sumitomo Mitsui vs. Mitsubishi UFJ Financial | Sumitomo Mitsui vs. ING Group NV | Sumitomo Mitsui vs. HSBC Holdings PLC |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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