Correlation Between Lockheed Martin and Vipshop Holdings
Can any of the company-specific risk be diversified away by investing in both Lockheed Martin and Vipshop Holdings 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 Vipshop Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lockheed Martin and Vipshop Holdings Limited, you can compare the effects of market volatilities on Lockheed Martin and Vipshop Holdings 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 Vipshop Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lockheed Martin and Vipshop Holdings.
Diversification Opportunities for Lockheed Martin and Vipshop Holdings
0.59 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Lockheed and Vipshop is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Lockheed Martin and Vipshop Holdings Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vipshop Holdings 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 Vipshop Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vipshop Holdings has no effect on the direction of Lockheed Martin i.e., Lockheed Martin and Vipshop Holdings go up and down completely randomly.
Pair Corralation between Lockheed Martin and Vipshop Holdings
Considering the 90-day investment horizon Lockheed Martin is expected to generate 0.34 times more return on investment than Vipshop Holdings. However, Lockheed Martin is 2.9 times less risky than Vipshop Holdings. It trades about 0.13 of its potential returns per unit of risk. Vipshop Holdings Limited is currently generating about -0.02 per unit of risk. If you would invest 42,085 in Lockheed Martin on August 23, 2024 and sell it today you would earn a total of 12,116 from holding Lockheed Martin or generate 28.79% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lockheed Martin vs. Vipshop Holdings Limited
Performance |
| Timeline |
| Lockheed Martin |
| Vipshop Holdings |
Lockheed Martin and Vipshop Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lockheed Martin and Vipshop Holdings
The main advantage of trading using opposite Lockheed Martin and Vipshop Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lockheed Martin position performs unexpectedly, Vipshop Holdings 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 Vipshop Holdings will offset losses from the drop in Vipshop Holdings' long position.| Lockheed Martin vs. Northrop Grumman | Lockheed Martin vs. General Dynamics | Lockheed Martin vs. L3Harris Technologies | Lockheed Martin vs. The Boeing |
| Vipshop Holdings vs. JD Inc Adr | Vipshop Holdings vs. Alibaba Group Holding | Vipshop Holdings vs. Sea | Vipshop Holdings vs. Jumia Technologies AG |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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