Correlation Between Lockheed Martin and E W
Can any of the company-specific risk be diversified away by investing in both Lockheed Martin and E W 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 E W into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lockheed Martin and E W Scripps, you can compare the effects of market volatilities on Lockheed Martin and E W 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 E W. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lockheed Martin and E W.
Diversification Opportunities for Lockheed Martin and E W
0.26 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Lockheed and SSP is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Lockheed Martin and E W Scripps in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on E W Scripps 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 E W. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of E W Scripps has no effect on the direction of Lockheed Martin i.e., Lockheed Martin and E W go up and down completely randomly.
Pair Corralation between Lockheed Martin and E W
Considering the 90-day investment horizon Lockheed Martin is expected to generate 0.12 times more return on investment than E W. However, Lockheed Martin is 8.13 times less risky than E W. It trades about -0.19 of its potential returns per unit of risk. E W Scripps is currently generating about -0.03 per unit of risk. If you would invest 57,110 in Lockheed Martin on August 24, 2024 and sell it today you would lose (2,909) from holding Lockheed Martin or give up 5.09% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lockheed Martin vs. E W Scripps
Performance |
| Timeline |
| Lockheed Martin |
| E W Scripps |
Lockheed Martin and E W Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lockheed Martin and E W
The main advantage of trading using opposite Lockheed Martin and E W positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lockheed Martin position performs unexpectedly, E W 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 E W will offset losses from the drop in E W's long position.| Lockheed Martin vs. Northrop Grumman | Lockheed Martin vs. General Dynamics | Lockheed Martin vs. L3Harris Technologies | Lockheed Martin vs. The Boeing |
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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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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