Correlation Between Lockheed Martin and Vanguard Consumer
Can any of the company-specific risk be diversified away by investing in both Lockheed Martin and Vanguard Consumer 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 Vanguard Consumer into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lockheed Martin and Vanguard Consumer Discretionary, you can compare the effects of market volatilities on Lockheed Martin and Vanguard Consumer 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 Vanguard Consumer. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lockheed Martin and Vanguard Consumer.
Diversification Opportunities for Lockheed Martin and Vanguard Consumer
-0.29 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Lockheed and Vanguard is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding Lockheed Martin and Vanguard Consumer Discretionar in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vanguard Consumer 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 Vanguard Consumer. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vanguard Consumer has no effect on the direction of Lockheed Martin i.e., Lockheed Martin and Vanguard Consumer go up and down completely randomly.
Pair Corralation between Lockheed Martin and Vanguard Consumer
Considering the 90-day investment horizon Lockheed Martin is expected to generate 2.66 times less return on investment than Vanguard Consumer. But when comparing it to its historical volatility, Lockheed Martin is 1.1 times less risky than Vanguard Consumer. It trades about 0.03 of its potential returns per unit of risk. Vanguard Consumer Discretionary is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 23,057 in Vanguard Consumer Discretionary on August 27, 2024 and sell it today you would earn a total of 13,793 from holding Vanguard Consumer Discretionary or generate 59.82% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lockheed Martin vs. Vanguard Consumer Discretionar
Performance |
| Timeline |
| Lockheed Martin |
| Vanguard Consumer |
Lockheed Martin and Vanguard Consumer Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lockheed Martin and Vanguard Consumer
The main advantage of trading using opposite Lockheed Martin and Vanguard Consumer positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lockheed Martin position performs unexpectedly, Vanguard Consumer 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 Vanguard Consumer will offset losses from the drop in Vanguard Consumer's long position.| Lockheed Martin vs. Northrop Grumman | Lockheed Martin vs. General Dynamics | Lockheed Martin vs. L3Harris Technologies | Lockheed Martin vs. The Boeing |
| Vanguard Consumer vs. Vanguard Consumer Staples | Vanguard Consumer vs. Vanguard Industrials Index | Vanguard Consumer vs. Vanguard Communication Services | Vanguard Consumer vs. Vanguard Materials Index |
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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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