Correlation Between Lockheed Martin and Schneider Electric
Can any of the company-specific risk be diversified away by investing in both Lockheed Martin and Schneider Electric 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 Schneider Electric into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lockheed Martin and Schneider Electric SE, you can compare the effects of market volatilities on Lockheed Martin and Schneider Electric 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 Schneider Electric. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lockheed Martin and Schneider Electric.
Diversification Opportunities for Lockheed Martin and Schneider Electric
0.11 | Correlation Coefficient |
Average diversification
The 3 months correlation between Lockheed and Schneider is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding Lockheed Martin and Schneider Electric SE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Schneider Electric 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 Schneider Electric. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Schneider Electric has no effect on the direction of Lockheed Martin i.e., Lockheed Martin and Schneider Electric go up and down completely randomly.
Pair Corralation between Lockheed Martin and Schneider Electric
Considering the 90-day investment horizon Lockheed Martin is expected to under-perform the Schneider Electric. But the stock apears to be less risky and, when comparing its historical volatility, Lockheed Martin is 1.46 times less risky than Schneider Electric. The stock trades about -0.09 of its potential returns per unit of risk. The Schneider Electric SE is currently generating about -0.03 of returns per unit of risk over similar time horizon. If you would invest 24,515 in Schneider Electric SE on August 27, 2024 and sell it today you would lose (340.00) from holding Schneider Electric SE or give up 1.39% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lockheed Martin vs. Schneider Electric SE
Performance |
| Timeline |
| Lockheed Martin |
| Schneider Electric |
Lockheed Martin and Schneider Electric Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lockheed Martin and Schneider Electric
The main advantage of trading using opposite Lockheed Martin and Schneider Electric positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lockheed Martin position performs unexpectedly, Schneider Electric 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 Schneider Electric will offset losses from the drop in Schneider Electric's long position.| Lockheed Martin vs. Northrop Grumman | Lockheed Martin vs. General Dynamics | Lockheed Martin vs. L3Harris Technologies | Lockheed Martin vs. The Boeing |
| Schneider Electric vs. Air Liquide SA | Schneider Electric vs. Vinci SA | Schneider Electric vs. LOreal SA | Schneider Electric vs. Compagnie de Saint Gobain |
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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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