Correlation Between Lockheed Martin and Sixth Street
Can any of the company-specific risk be diversified away by investing in both Lockheed Martin and Sixth Street 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 Sixth Street into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lockheed Martin and Sixth Street Specialty, you can compare the effects of market volatilities on Lockheed Martin and Sixth Street 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 Sixth Street. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lockheed Martin and Sixth Street.
Diversification Opportunities for Lockheed Martin and Sixth Street
0.25 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Lockheed and Sixth is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Lockheed Martin and Sixth Street Specialty in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sixth Street Specialty 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 Sixth Street. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sixth Street Specialty has no effect on the direction of Lockheed Martin i.e., Lockheed Martin and Sixth Street go up and down completely randomly.
Pair Corralation between Lockheed Martin and Sixth Street
Considering the 90-day investment horizon Lockheed Martin is expected to under-perform the Sixth Street. In addition to that, Lockheed Martin is 1.48 times more volatile than Sixth Street Specialty. It trades about -0.2 of its total potential returns per unit of risk. Sixth Street Specialty is currently generating about 0.09 per unit of volatility. If you would invest 2,057 in Sixth Street Specialty on August 27, 2024 and sell it today you would earn a total of 37.00 from holding Sixth Street Specialty or generate 1.8% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lockheed Martin vs. Sixth Street Specialty
Performance |
| Timeline |
| Lockheed Martin |
| Sixth Street Specialty |
Lockheed Martin and Sixth Street Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lockheed Martin and Sixth Street
The main advantage of trading using opposite Lockheed Martin and Sixth Street positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lockheed Martin position performs unexpectedly, Sixth Street 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 Sixth Street will offset losses from the drop in Sixth Street's long position.| Lockheed Martin vs. Northrop Grumman | Lockheed Martin vs. General Dynamics | Lockheed Martin vs. L3Harris Technologies | Lockheed Martin vs. The Boeing |
| Sixth Street vs. New Mountain Finance | Sixth Street vs. Carlyle Secured Lending | Sixth Street vs. BlackRock TCP Capital | Sixth Street vs. Fidus Investment Corp |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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